Moraes removes IOF retroactive collection and eliminates risk to banks and investors

Minister Alexandre de Moraes of the Federal Supreme Court (STF) has ruled that there will be no retroactive collection of the IOF (Tax on Financial Operations) on operations carried out between June 27 and July 16, during which time the tax rates that tax rates were suspended by decision of the National Congress and, then, Moraes himself.

The decision clarifies an earlier measure of the minister himself, who had opened margin for interpretation of retroactive collection. According to Moraes, “the major rates do not apply retroactively” during the suspension of the presidential norm. The determination was motivated by arguments from entities such as the Federation of Industries of Paraná (FIEP), which pointed to risk of legal insecurity and operational difficulties with the possible retroactive collection.

“The dynamics and complexity of financial operations subject to that tax is a significant obstacle to the operationalization of tax exation, at risk of insecurity and unjustified increase in litigation between tax authorities and economic agents,” the minister wrote in his decision.

The IRS had already signaled that would not require the tax retroactively from financial institutions. With the new decision, the dismissal is also valid for taxpayers who hired loans or carried out financial operations in the period.

Lawyer Eduardo Pugliese of the Pugliese Advogados office said Moraes’s decision is “more comprehensive, free from the suspension period and those responsible (banks) or taxpayers (borrowers). The decision protects both.”

The change brings relief to the financial sector and taxpayers who had already been warned about the risk of tax liabilities. According to the office Cepeda Advogados, the previous precautionary measure could generate chief charges, fine and interest for various IOF modalities, which is now discarded.

Despite the new definition, the decision will still be analyzed by the STF plenary. Until then, it is worth the waiver of retroactive collection.