Brazil: Legislation suspending increases to financial transaction tax (IOF) rates overturned (Federal Supreme Court decision)
Executive branch increases to IOF rates upheld and reinstated.
Congress on June 25, 2025, approved Draft Legislative Decree No. 214/2025, suspending three presidential decrees that increased financial transaction tax (IOF) rates. Published as Legislative Decree No. 176/2025 on June 27, 2025, it reinstated the IOF rates effective before May 22, 2025, without retroactive application.
The Attorney General on July 1, 2025, challenged Legislative Decree No. 176/2025 before the Federal Supreme Court, asserting the Executive Branch's constitutional authority to legislate IOF rate changes.
The Federal Supreme Court on July 16, 2025, overturned Legislative Decree No. 176/2025 and reinstated the IOF rate increases by the Executive Branch, except with regard to the IOF charge on "forfait operations."
For more information, contact a KPMG tax professional in Brazil:
Morivan Fernandes | mpfernandes@kpmg.com.br
Fabio Cunha Dower| fabiodower@kpmg.com.br