Brazil’s government to compensate states $5.2 billion for cut in state tax ICMS

Brazil’s Finance Minister, Fernando Haddad, announced on Friday that the federal government will provide compensation of 26.9 billion reais ($5.2 billion) to states for their losses due to the reduction of the state tax ICMS.
The Congress approved a ceiling on ICMS tax rates for fuels, electricity, telecommunications, and public transportation services last year with the support of then-President Jair Bolsonaro’s government, as part of efforts to reduce inflation.
The law already provided for federal government compensation, but there was no consensus on the amount to be transferred.
According to Haddad, the figures presented for compensation, which the Federal Supreme Court sought to mediate, ranged from 18 billion reais to 45 billion Brazilian reais.