Haddad's Tax Plan: LCI and LCA Investments to Face New Levy

Brazil's Finance Minister, Fernando Haddad, announced a plan to introduce a 5% income tax on Letras de Crédito Imobiliário (LCI) and Letras de Crédito do Agronegócio (LCA), currently tax-exempt investment options. This move aims to offset the potential revenue loss from a possible IOF tax reduction. "The letters of credit have become market favorites precisely because of the exemption factor," explains Lucas Constantino, chief strategist at GCB Investimentos. While acknowledging continued high demand, Constantino suggests the tax will reduce the attractiveness of LCI and LCA. The government intends to implement this alongside increased taxes on sports betting and the Social Contribution on Net Profits (CSLL) for financial institutions. This policy shift will likely impact investors and the broader financial market.