Brazil's top court backs Lula's tax hike, exempts forfait
FILE PHOTO: A general view of the plenary chamber of deputies during a session at the National Congress in Brasilia, Brazil December 18, 2024. REUTERS/Adriano Machado/File Photo
BRASILIA - Brazil's highest court on Wednesday upheld most of a controversial presidential decree raising the country's Financial Operations Tax (IOF), handing a revenue-boosting win to President Luiz Inacio Lula da Silva's government.
Judge Alexandre de Moraes ruled that only the proposed tax hike on forfait - advance payments made to suppliers that were previously treated by the government as credit operations - would be cut back.
The decree, which includes tax hikes on other financial transactions such as credit, foreign exchange, and private pension transactions, had been suspended by Congress, causing the dispute to go up to the Supreme Court.
Brazil's finance ministry issued a statement that welcomed the court's decision, saying it would help restore harmony between branches of government.
Blocking the proposed IOF tax hike on forfait payments represents a lost revenue of 450 million reais ($80.9 million) this year and a further 3.5 billion reais in 2026, it added.
The ministry had previously estimated that the entire decree would boost state coffers by 12 billion reais this year and 31 billion reais in 2026. REUTERS
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