The drop of 1,303 deputies reignites the debate on legal certainty and could lead to a new increase in the IOF
Summary
The expiration of MP 1.303 could lead to a new increase in IOF by decree, generating a debate on fiscal predictability and the impact on revenue collection.
The loss of validity of provisional measure no. 1.303, which provided for the unified taxation of investments, bets and financial income, reignited the debate on fiscal predictability and the autonomy of the executive to increase taxes without the approval of the national Congress.
According to tax expert Carlos Crosara, of Natal & Manssur Advogados, the deputy “ceases to exist in the legal world and to produce effects upon its expiry, but the acts carried out while it was in force remain valid”.
He explains that, according to the Constitution, “the loss of effectiveness has effects ex nunc, that is, immediately, and not retroactively as would happen in a declaration of unconstitutionality”.
Therefore, those who have paid taxes according to the rules established by the parliamentarian are not automatically entitled to a refund. “Only a possible court decision declaring the measure unconstitutional could give rise to the right to compensation,” adds the lawyer.
Crosara also notes that the MP’s failure to convert was the result of a political articulation between the opposition and the Centrão, which saw the deadline as a way to put pressure on the government in budget negotiations. “The Minister of Finance has already announced that he will have to resort to a decree to increase the IOF, which is permitted by the Constitution, even if the tax should only be adjusted for non-fiscal purposes,” he underlines.
For lawyer Marcelo Costa Censoni Filho, partner of Censoni Advogados Associados, the loss of validity of the MP “keeps the previous tax system fully in force, without any collection carried out at the new proposed rates”. According to him, “the expiration of the measure represents an estimated hole of 17 billion reais in the revenue forecast for 2026, which should lead the government to adopt spending containment measures and increase taxes such as IOF and IPI by decree.”
Tax specialist Luís Garcia, partner of MLD Advogados Associados, assesses that payments made on the basis of a then valid rule “produce legitimate and effective effects”, without, as a rule, the right to reimbursement. He considers the possibility that Congress will issue a legislative decree that reverses the effects of the MP to be remote and warns that the government tends to seek revenue through regulatory taxes and measures that reduce the attractiveness of exempt investments, such as LCI and LCA, “in a movement that highlights the imbalance between fiscal adjustment and incentives for the real economy”.
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Source: Terra
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