Brazil Implements IOF Tax Hike to Close Budget Gap

Brazil Raises IOF Tax to Bolster Budget: The Brazilian government announced a significant increase in the IOF tax on financial transactions for businesses, aiming to generate R$20.5 billion in additional revenue this year and R$41 billion in 2026. This move comes as the government seeks to address budget constraints, with Finance Minister Fernando Haddad explaining the decision in a press conference. "Without the IOF increase," Haddad stated, "the budget cuts would have been far more severe." The tax hike primarily impacts corporate credit operations, although the government has clarified that personal loans, student loans, housing financing, and Finame-backed financing for machinery and equipment purchases by legal entities remain unaffected. The increased IOF rates took effect on May 23rd, 2025. This decision highlights the government's efforts to balance fiscal responsibility with economic growth.