Good morning! Today, we talk about Brazilian revenue losses — both self-inflicted (in the form of tax waivers) and caused by tax evasion or optimization practices. And Brazil’s new mid-month inflation index further fuels interest rate cut expectations.
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Lost revenue from tax-free cross-border sales
A tax waiver on international purchases under USD 50, which will take effect on August 1, will amount to around BRL 32 billion (USD 6.6 billion) in sacrificed revenue over the next four years, the Finance Ministry confirmed to Brasília correspondent Cedê Silva.
- The government had not previously disclosed the estimated revenue loss. The numbers come from an analysis by the Federal Revenue Service, obtained through Brazil’s access to information law.
Why it matters. The proposed new fiscal framework foresees the quick conversion of primary deficits into surpluses — something Brazil has only managed to do during a commodity supercycle. But the government is increasing spending in multiple areas, such as social policies, so any lost revenue stings.
Context. In late June, the Finance Ministry changed import...