Conciliation on IOF ends without agreement; Alexandre de Moraes will decide the issue
A conciliation hearing held at the Supreme Federal Court (STF) on Tuesday (15) ended without an agreement between the federal government and the National Congress regarding the taxation of financial operations known as “drawn risk” under the Tax on Financial Transactions (IOF).
The divergence revolves around interpretation: the government believes that these operations constitute credit and are therefore taxable, while Congress argues that they are merely advances of resources, without characteristics of a loan.
During the hearing, the reporting minister Alexandre de Moraes sought to encourage an understanding between the parties to avoid the formal judgment of the issue, but neither party showed willingness to negotiate.
In light of this, Moraes ended the conciliation attempt and announced that he would issue a monocratic — that is, individual — decision on the case. The expectation is that this ruling will occur during the judicial recess, which lasts until the end of July.
The outcome of the judgment has significant impact on public finances, as the taxation on drawn risk could generate up to R$ 12 billion in federal revenue this year. If the STF suspends the collection, the government will need to seek alternatives to balance the budget, such as spending cuts, reductions, or the creation of new sources of revenue.
Alexandre de Moraes's decision, being monocratic, will have immediate effect, determining whether the government can continue to collect the tax on these operations until the matter is eventually considered by the STF plenary.
The situation highlights yet another dispute between the Executive and Legislative powers, with direct repercussions for the country's fiscal policy and the business environment.
Source: Brasil247