Brasil

January 17th, 2025

REGRESA

1. Government revokes Pix monitoring regulation

The federal government has decided to repeal the tax authority’s regulation that altered the monitoring of financial transactions. The measure, which came into effect in 2025, required transactions above R$ 5,000 for individuals and R$ 15,000 for businesses to be reported to the Federal Revenue Department through the e-Financeira system. The rollback was announced by the Secretary of the Revenue Service, Robinson Barreirinhas, following a meeting with President Lula. Barreirinhas also promised to issue a Provisional Measure (MP) reinforcing the exemption of fees on Pix transactions.

Finance Minister Fernando Haddad emphasized that the MP would ensure no taxation on Pix transactions, aiming to protect consumers and counter misinformation. He explained that the regulation’s intent was to standardize data reporting by financial institutions and aid in combating organized crime without penalizing citizens. Haddad also criticized opposition figures, such as Congressman Nikolas Ferreira, whose viral video suggested the government had future plans to tax Pix transactions.

Agência Brasil: Receita revoga ato normativo que previa fiscalização do Pix
InfoMoney: Pix: governo Lula recua e revogará norma da Receita sobre movimentação financeira
G1: Após repercussão negativa e fake news, governo decide revogar ato sobre fiscalização do PIX

2. Economic projections for 2025 and 2026: adjusted inflation and more

The Focus Report, released by the Central Bank, highlights upward revisions in inflation projections for 2025 and 2026, with estimates adjusted from 4.99% to 5.00% and from 4.03% to 4.05%, respectively. Despite the slight increase, the median Selic rate for 2025 remains stable at 15%, while the exchange rate forecast holds steady at R$ 6.00. The GDP growth expectation for 2025 also remains unchanged at 2.02%. For more distant years, such as 2027 and 2028, projections indicate moderate fluctuations, reflecting an economic scenario with occasional adjustments.

Other indicators, such as the trade balance and public debt, show marginal changes. The trade surplus estimate for 2025 was revised to US$ 73.95 billion, while the projected net debt fell to 66.95% of the GDP. Exchange rate forecasts, hovering around R$ 6.00 through 2028, and fiscal outcome projections suggest stability in long-term trends. These figures reflect expectations of a cautious economic scenario, with gradual adjustments and moderate uncertainties in the years ahead.

InfoMoney: Boletim Focus: analistas elevam projeções para inflação em 2025 e 2026

3. Tax reform in Brazil: first rules take effect

President Luiz Inácio Lula da Silva has signed into law the first bill regulating the Tax Reform approved in 2023. The legislation establishes the foundation for a new taxation system, which will replace five existing taxes (ICMS, ISS, IPI, PIS, and Cofins) with three new levies: CBS (Contribution on Goods and Services), IBS (Tax on Goods and Services), and the Selective Tax (IS), a surcharge targeting products harmful to health and the environment. Implementation will be gradual, with a trial phase starting in 2025 and full enforcement expected by 2033.

The reform sets a cap on the tax burden for the new levies at 26.5%, with periodic reviews every five years. If rates exceed this threshold, a new bill must be submitted to Congress for adjustments. Additionally, the system will include a “split payment” mechanism, allowing instant tax allocation.

Some changes take immediate effect with the presidential sanction, such as the elimination of PIS/Pasep and Cofins levies on the gross revenue of alcohol producers and distributors, as well as the end of special tax regimes for these contributions. The reform aims to simplify Brazil’s tax system, reduce compliance costs, and enhance transparency. However, its full implementation will require nearly a decade of adjustments and evaluations.

G1: Lula sanciona nesta quinta primeira lei que regulamenta Reforma Tributária

4. Brazil’s deficit to grow in 2025

Brazil is set to face one of the largest nominal deficits globally in 2024 and 2025, according to data from the IMF and projections by BTG Pactual. With estimates of 7.8% of GDP in 2024 and 8.6% in 2025, the country ranks second only to Bolivia among 23 emerging and developed economies analyzed. While other Latin American nations – such as Mexico, Chile, and Peru – expect deficits below 4% during this period, Brazil will be the only country in the region to see an increase in this index.

Although the central government’s primary deficit is expected to improve, projected at 0.4% of GDP in 2024 compared to 2.4% in 2023, interest expenses are set to rise from 6.6% to 7.5% of GDP in 2024 and reach 8% in 2025. These figures place Brazil’s nominal deficit above the averages for emerging economies (-5.7% and -5.6% of GDP in 2024 and 2025) and developed economies (-5% and -4.5%). The trajectory of public debt, heavily influenced by this growing deficit, remains a key concern for investors and a source of pressure in local markets.

Valor Econômico: Déficit nominal do Brasil dispara e se distancia do de países emergentes

5. Expansion of microenterprises in Brazil

Brazil experienced a significant increase in the creation of microenterprises (MEs) in 2024, with 874,000 new businesses of this size, a 21% growth compared to 2023. According to a survey by Sebrae, the Services sector led the way, accounting for 60% of new enterprises, followed by Commerce (25%) and Industry (15%). Among the most sought-after economic activities were sales promotion, administrative services, retail clothing trade, and freight road transport. Credit availability and public policies supporting small businesses played a pivotal role in creating opportunities across the country.

Small businesses (EPPs) and individual micro-entrepreneurs (MEIs) also saw growth, with increases of 16.5% and 6.7%, respectively. Together, these categories added millions of new tax registrations (CNPJs), solidifying the strategic importance of small businesses in Brazil’s economy. This expansion underscores the prominence of the Services sector and economic diversification, while optimistic prospects for 2025 are driven by continued incentives and a more accessible business environment.

O Globo: Número de microempresas cresce 21% em 2024: veja os 10 tipos de negócios que mais abriram as portas