LatinNews Daily - 17 July 2025

*Brazilian supreme court (STF) justice Alexandre de Moraes has ruled in favour of restoring all but one of the tax hikes decreed in May and then amended in June which included increases in the rates of the financial operations tax (IOF). On 4 July De Moraes suspended the IOF decree and the bill passed by congress on 25 June that overturned the tax hikes. On 15 July De Moraes chaired a hearing in which representatives from the executive and congress could reach an agreement over how to proceed with the tax hikes, but the session did not result in any deal. Without a clear pathway to conciliation, De Moraes took the decision himself on 16 July to restore all the IOF tax increases except for the part of the government decree which changed the tax rate for ‘risco sacado’ (drawn risk) transactions akin to forfait operations in trade financing. The restoration of these tax hikes marks a boost for the government of President Luiz Inácio Lula da Silva, which has been reluctant to make major spending cuts, instead focusing on boosting tax revenue to meet fiscal targets.

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