# Brazilian fiscal and tax policy developments

> Developing situation record from CLSTR: https://clstr.news/situations/brazilian-fiscal-and-tax-policy-developments
> Updated: 2026-10-31T22:05:00.000Z. Sources: 10. Developments: 2.

The Brazilian Federal Revenue reported a historic total of over R$ 41 billion in income tax refunds for 2026, benefiting nearly 26 million citizens. This process included an IRPF cashback system and educational initiatives like ‘Projeto Cartas’ to help taxpayers rectify errors before formal audits.

Concurrently, municipal governments are facing financial uncertainty stemming from national tax reform and declining federal transfers. A study by CEDEPLAR/UFMG, commissioned by the Brazilian Association of Mining Municipalities (AMIG Brasil), indicates that the 30 largest mining municipalities could see a combined revenue loss of over R$ 2 billion. This decline is attributed to a shift in distribution criteria for the new Goods and Services Tax (IBS), which will place greater emphasis on population size rather than local economic production.

In Mato Grosso, the Association of Mato Grosso Municipalities (AMM) has warned that smaller municipalities with high productive capacity but low populations may suffer as tax distribution shifts toward consumption-based models. These structural concerns are compounded by declines in the Municipal Participation Fund (FPM). Official data shows real decreases in transfers during August and September 2026, driven by lower federal tax collection, particularly from corporate income tax. The National Confederation of Municipalities (CNM) has warned that potential changes to income tax exemption thresholds could cause annual losses of up to R$ 9.5 billion for municipalities.

## Timeline

### 2026-10-31: Brazil tax reform threatens municipal revenues

Brazil's tax reform and declining federal transfers are threatening municipal revenues, with mining and productive regions facing potential multi-billion real losses.

4 sources. https://clstr.news/cluster/brazilian-municipalities-face-revenue-risks-from-tax-reform-and-federal-fund-cuts

### 2026-10-25: Brazil Federal Revenue issues R$ 41 billion in income tax refunds

Brazil's Federal Revenue has distributed over R$ 41 billion in income tax refunds to 26 million citizens in 2026, alongside new measures to help taxpayers resolve filing discrepancies.

6 sources. https://clstr.news/cluster/brazil-federal-revenue-issues-r-41-billion-in-income-tax-refunds

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Cite as: Brazilian fiscal and tax policy developments. CLSTR, https://clstr.news/situations/brazilian-fiscal-and-tax-policy-developments