A majority of judges on Brazil’s Supreme Court voted on Monday to back tax authorities in a judgment on how to calculate levies on banks and other financial institutions that could add as much as 115 billion reais ($23.6 billion) to state coffers.
The court ruling means that a federal tax collected from banks, brokers and insurance companies between 2000 and 2014 should be levied on the total revenue generated by the firms, rather than solely on their operating revenue.
The judges backed Brazil’s finance ministry, which had argued the tax should apply to gross revenue, including financial revenue. Financial institutions had argued the tax should only be levied on revenues from the sale of goods and services.
Banking federation Febraban estimated that the court’s ruling would cost the institutions an extra 12 billion reais in tax obligations, based on data from nine banks, but well below the 115 billion reais estimated by the finance ministry.
($1 = 4.8706 reais)
(Reporting by Ricardo Brito; writing by Peter Frontini; editing by David Alire Garcia and Sonali Paul)
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