Brazil's Finance Ministry Backtracks on Controversial IOF Tax Hike

Brazil's Ministry of Finance Reverses Part of IOF Tax Increase Brazil's Ministry of Finance made headlines today with a partial reversal of a recently implemented decree that increased the IOF tax. The decision, announced by Finance Minister Fernando Haddad, follows a wave of negative public and market reaction to the initial increase. The decree aimed to boost government revenue and ensure fiscal responsibility, but the swift reversal suggests unexpected consequences. Haddad stated, "The repercussions were so negative that the economic team backtracked less than 24 hours later." The video shows Haddad explaining the situation at a press conference. The government's initial plan included a significant hike in IOF for business loans, increasing from 1.88% to 3.95% annually. The IOF on Simples Nacional businesses also rose, going from 0.8% to 1.95% annually. However, the tax increase on investments in foreign funds has been revoked, maintaining a zero rate. The video also highlights changes to the IOF on purchasing foreign currency. The tax will now be a uniform 3.5% regardless of whether the purchase is made in cash or by card. This change, according to SBT News, is intended to streamline tax collection and increase government revenue. While the partial reversal represents a significant shift in policy, the remaining portions of the decree remain in effect, indicating the government's commitment to fiscal goals.