The decree signed by President Luiz Inácio Lula da Silva, together with Finance Minister Fernando Haddad, raised the IOF (Tax on Financial Operations) rates on various financial transactions, including international purchases made with credit and debit cards.
The government estimates it will collect R$ 20.5 billion (US$3.62bn) in 2025 and R$ 41 billion (US$7.24bn) in 2026 from these changes, which are justified by the need to reduce public debt and achieve a primary surplus target of 0.25% of GDP.
However, the measure triggered a strong negative reaction from several economic sectors. FHORESP, which represents the hospitality sector, criticized the increase, stating that the higher tax rate could harm tourism by discouraging consumption of products and services in Brazil.
The organization also emphasized that the impact will be worsened by the rising dollar and euro, making foreign exchange operations and international travel more difficult.
According to FHORESP, instead of raising taxes on financial transactions, the federal government should target sectors currently outside the fiscal radar, such as virtual betting houses ('Bets'), platforms like Airbnb, cryptocurrency operations, and the elimination of billion-dollar subsidies to large corporations.
“The Brazilian government is making a mistake by increasing taxes instead of regulating activities that move billions and remain outside fiscal control. We want to join this discussion with the federal government and present alternative solutions that don’t further penalize Brazilian entrepreneurs,” said Edson Pinto, executive director of FHORESP.
According to Pinto, “the proposal to tax BETs aims to create a more balanced revenue alternative without harming the tourism sector.” The organization argues that taxing these platforms could generate new revenue streams and expand public collection.
The urgent regulation of the so-called 'Bets' is seen as a top priority by the organization. According to Pinto, these platforms operate freely in Brazil, moving large sums without any tax collection. The same is true for cryptocurrencies, which also escape traditional oversight.
At the same time, FHORESP supports the approval of Bill 2.234/2022, which addresses the legalization of casinos integrated into resorts. According to the organization, besides boosting tourism and employment, the measure could expand the federal revenue base, with greater oversight by the tax authority over these activities.
Source: GMB
