The fall of Provisional Measure 1.303 reignites debate on legal certainty and could lead to a new increase in IOF (Tax on Financial Operations).

The expiration of Provisional Measure No. 1.303, which provided for the unified taxation of investments, bets, and financial income, has reignited the debate about fiscal predictability and the Executive's autonomy to raise taxes without the approval of the National Congress.

According to tax lawyer Carlos Crosara, from Natal & Manssur Advogados, the Provisional Measure "ceases to exist in the legal world and to produce effects from the moment it expires, but the acts performed while it was in force remain valid." He explains that, according to the Constitution, "the loss of effectiveness has ex nunc effects, that is, from now on, and not retroactive effects as would occur in a declaration of unconstitutionality."
Therefore, those who paid taxes based on the rules established by the Provisional Measure do not have an automatic right to a refund. "Only a possible court decision declaring the measure unconstitutional could generate the right to reimbursement," the lawyer adds.

Crosara further notes that the failure to convert the Provisional Measure was the result of political maneuvering by the opposition and the Centrão (center-right bloc), who saw its expiration as a way to pressure the government in budget negotiations. "The Finance Minister has already announced that he will likely resort to a decree to raise the IOF (tax on financial transactions), which is permitted by the Constitution, although the tax should only be adjusted for extra-fiscal purposes," he points out.

According to lawyer Marcelo Costa Censoni Filho, partner at Censoni Advogados Associados, the expiration of the Provisional Measure "maintains the previous tax system fully in force, without any collection being made under the proposed new rates." He stated that "the lapse of the measure represents an estimated shortfall of R$ 17 billion in the projected revenue for 2026, which should lead the government to adopt measures to contain spending and raise taxes such as IOF and IPI by decree."

Tax lawyer Luís Garcia, partner at MLD Advogados Associados, believes that payments made based on a rule valid at the time "produce legitimate and effective effects," and, as a rule, there is no right to restitution. He considers the possibility of Congress issuing a legislative decree reversing the effects of the Provisional Measure remote, and warns that the government tends to seek revenue through regulatory taxes and measures that reduce the attractiveness of tax-exempt investments, such as LCI and LCA, "in a move that highlights the imbalance between fiscal adjustment and incentives for the real economy."