Government backtracks on IOF increase and presents tax compensation package: understand the impacts of MP 1.303/2025

LCI, LCA, Bets, crypto assets and others: See what changes in taxation were proposed by the new MP.

After weeks of tension between the Executive and the National Congress, the federal government officially revoked the increase in the IOF (Tax on Financial Transactions) and, in its place, presented a package of fiscal adjustments through Provisional Measure No. 1,303/2025. The measure was published in an extra edition of the Official Gazette of the Union on June 11 and, to be definitively valid, it will need to be approved by Congress by August 28.

More than a simple course correction, the MP represents a structural change in the taxation of financial investments, with potential impacts for both individual investors and financial institutions. In this article, we analyze the main points of the proposal and what it signals for the Brazilian tax scenario in the coming years.

Why was the IOF increase abandoned?

The government's initial proposal called for an increase in the IOF rate on credit transactions as a means of immediate revenue collection. However, the measure generated strong resistance in Congress, especially among productive sectors and financial institutions, which argued that the increase in the IOF would penalize corporate credit and harm economic activity.

Faced with pressure, the Ministry of Finance, led by Fernando Haddad, articulated a new strategy: to backtrack on the increase in the IOF and present a set of broader and more distributed tax measures, with a projected fiscal impact of R$10.5 billion in 2025 and R$20.6 billion in 2026.

What changes with MP 1.303/2025?

The new MP brings significant changes to the taxation of financial products, expanding the Income Tax base, modifying the CSLL of financial institutions, increasing the burden on sports betting and imposing new rules for tax compensations.

• Reduction of IOF on corporate credit

  
  

The fixed IOF rate on credit to legal entities was reduced from 0.95% to 0.38% .

In operations known as "drafted risk" — used to advance receivables — the fixed rate was eliminated, maintaining only the daily component of 0.0082%, which represents an effective reduction of up to 80% .

• Resumption of exemption for foreign investments

  
  

The MP maintains the IOF exemption on the return of foreign direct investments , an important demand to ensure predictability and attractiveness to international capital.

Taxation of previously exempt products: LCI, LCA, CRI, CRA and incentivized debentures

As of January 1, 2026 , previously exempt products such as LCI (Real Estate Credit Letter), LCA (Agribusiness Credit Letter), CRI (Real Estate Receivables Certificates), CRA (Agribusiness Receivables Certificates), and Incentivized Debentures will now be subject to a 5% income tax on income .

This change directly affects investors who use these products as an alternative to tax exemption and may lead to a repricing of these assets.

• End of the regressive IR table for financial investments

Fixed income investments now have a single rate of 17.5% , regardless of the redemption period.

The measure eliminates the regressive table that rewarded long-term investors and may affect the tax planning of those who opted for buy and hold strategies.

• Taxation of crypto assets

  
  

IR now applies to capital gains from crypto assets , even on transactions below R$35,000 , a range that until now was exempt.

The standardization of the rate at 17.5% brings the taxation of crypto assets closer to that of other financial assets, reinforcing the Federal Revenue Service's control over this type of operation.

• Sports betting

  
  

The rate on GGR (Gross Gaming Revenue) — that is, the operators' revenue, minus the prizes — will increase from 12% to 18% from October 2025.

• CSLL for the financial sector

  
  

The MP eliminates the reduced 9% rate of the Social Contribution on Net Income (CSLL), which benefited fintechs and some smaller institutions.

With this, institutions such as insurance companies, currency exchanges and real estate credit companies will contribute 15% . Large banks and financial institutions will contribute 20%.

How Atlantic can help

The Atlantic Tax & Advisory team monitors changes in tax legislation and developments in the National Congress in real time. We are prepared to offer strategic tax planning to mitigate the effects of new tax rates, assessing risks and opportunities based on future regulatory scenarios.

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