Brazil: Legislation suspending increases to financial transaction tax (IOF) rates overturned (Federal Supreme Court decision)

Executive branch increases to IOF rates upheld and reinstated.

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September 18, 2025

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

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