1. Chamber of Deputies approves Tax Reform Bill

On Wednesday, the Chamber of Deputies approved the bill that regulates the Tax Reform, which implements new taxes that will replace the current federal taxes.

The tax reform rules will be applied gradually over the coming years, so its effects will be felt over time. The bill includes the implementation of the IBS (Goods and Services Tax), CBS (Contribution on Goods and Services), and the Selective Tax (IS); the new taxes form the IVA (Value Added Tax) and will replace five taxes that currently apply to consumption: PIS, Cofins, IPI, ICMS, and ISS.

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2. IPCA decreases to 0.21% in June, below projections

Brazil’s official inflation, measured by the National Extended Consumer Price Index (IPCA), decreased to 0.21% in June, according to data by the IBGE (Brazilian Institute of Geography and Statistics). In May, the inflation rate was 0.46%.

The financial market did not expect the results in June, which were below expectations. According to a Reuters survey, the projection was for a rate of 0.32%. Over 12 months, the IPCA increased continuously, reaching 4.23%. The increase over the same period had been 3.93% up to May.

Folha: Inflação desacelera a 0,21% em junho e fica abaixo das projeções
InfoMoney: IPCA de junho desacelera para 0,21%, abaixo do esperado, diz IBGE

3. Government says taxing Big Techs could contribute to digital inclusion

Taxing large digital service providers could help Brazil advance in digital inclusion and bring the internet to parts of the country that currently lack access to these services. More than 23 million Brazilians over the age of 10 are unable to use technologies such as the internet, social networks, and mobile apps, according to government data.

According to the Minister of Communications, Juscelino Filho, the path to connectivity is not just a matter of internet access but also about ensuring that people have equal access to the opportunities generated online. He believes that taxing so-called “big techs” plays a crucial role in this issue. The discussion around taxing big techs is already taking place in other countries, including within the Organization for Economic Co-operation and Development (OECD), discussions in which Brazil participates.

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4. Brazilian Development Bank negotiates new contributions to the Climate Fund

The Brazilian Development Bank (BNDES) is negotiating with the Ministry of Finance to increase funding for the Climate Fund. According to the bank’s Planning Director, Nelson Barbosa, the National Treasury plans to contribute R$ 10 billion per year to the Fund.

The bank has also been discussing funding with international organizations. According to Barbosa, the Inter-American Development Bank (IDB), the German KFW, the World Bank, the Global Climate Fund, and other sovereign funds are interested in contributing.

The Climate Fund amounts to R$ 10.4 billion to finance projects related to energy transition, green mobility, and forest preservation, among others, with rates ranging from 1% to 8%. The program was created in 2009 and was resumed last year with the issuance of US$ 2 billion (approximately R$ 10 billion) in sustainable bonds overseas by the National Treasury.

Valor: BNDES negocia novos aportes no Fundo Clima

5. Future interest rates fall, indicating lower risk of Selic rate hike

The lower results of the National Extended Consumer Price Index (IPCA) in June, coupled with the significant decline of the dollar against the real last week, caused a firm drop in interest rates and led investors to reconsider the possibility, embedded in prices in recent days, that the Central Bank’s Monetary Policy Committee (Copom) would need to raise the Selic rate later this year.

With a 0.21% increase in June, the IPCA had a smaller variation than expected by the market, even surpassing the floor of the estimates collected by Valor Data, which was 0.23%. The data also showed positive numbers for service inflation, whose recent resilience has commanded of attention.

Valor: Juros futuros cedem e sinalizam risco menor de alta da taxa Selic