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Investing.com -- In a recent development, Brazil’s government has decided to reduce a controversial increase in taxes on certain financial transactions. The revenue shortfall from this move will be compensated by increasing taxes on online betting, private credit instruments, and financial institutions.
The new fiscal package was introduced by Finance Minister Fernando Haddad late on Sunday, following a meeting with congressional leaders to discuss adjustments to the decree issued last month. This decree, which increased the rates of the IOF tax, was designed to help the government meet its fiscal targets. However, it faced strong opposition from both Congress and market participants, prompting the government to devise an alternative strategy.
Under the new plan, Haddad informed the press, all private debt securities currently exempt from tax would be subject to a 5% income tax. The minister suggested that this move would help to eliminate market distortions that have been obstructing public debt rollover efforts.
This measure is likely to impact instruments used to finance real estate and agribusiness, such as LCI and LCA, which have seen significant growth in recent years.
Furthermore, Haddad revealed that the gross gaming revenue tax on popular online betting platforms operating in Brazil would increase from 12% to 18%. This new rate aligns with the government’s initial proposal to regulate the sector, which had previously been diluted in Congress.
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