Initially presented to offset the increase in the Financial Operations Tax (IOF), which had been overturned by Congress but later reinstated by a court decision, the provisional measure raising a series of taxes is part of the government’s strategy to balance public accounts in 2026, an election year, and avoid stricter spending limits. The initial forecast was to raise R$ 21 billion (US$3.9bn) next year.
The MP expands taxation on fixed-odds ('Bets'), raising the tax on company revenues from 12% to 18%, as well as on bettors’ net winnings.
The minister signaled the possibility of backing down on the government’s intention to end the exemption on so-called incentivized debentures, securities issued in the financial market to raise low-cost funds for infrastructure investments. Under the MP’s proposal, these debentures would be taxed at a 5% rate.
“There are several proposals being submitted to the Finance Ministry as part of the negotiation process, and this is one of the proposals we are carefully reviewing. The arguments in defense of incentivized debentures are strong,” said the minister.
The “recalibration” of the MP comes after strong resistance from the productive sector. Several entities criticized the measure, including the Brazilian Federation of Banks (Febraban), the Brazilian Association of Infrastructure and Basic Industries (Abdib), and the Brazilian Association of Public Companies (Abrasca), among others.
Source: GMB
