The startup ecosystem in Brazil faces a persistent paradox: while innovation is promoted as an engine of growth, regulatory and fiscal measures create significant barriers. The increase in the Tax on Financial Operations (IOF), instituted by Decree No. 12,466 of May 22, 2025, is a clear example of this contradiction. With high rates on credit operations, international remittances, and other financial instruments, the measure increases the cost of capital and amplifies legal uncertainty, directly impacting startups in critical stages of development. More than a fiscal adjustment, the increase in the IOF represents an obstacle to the dynamism of the innovative economy, demanding urgent reflection on how to balance revenue collection and competitiveness.
Changes to the IOF (Tax on Financial Operations) have direct implications for startup financing. The fixed rate on credit operations between legal entities increased from 0.38% to 0.95%, while the annual ceiling jumped from 1.5% to 3%, according to Decree No. 12,466/2025. For companies under the Simples Nacional (Simplified National Tax Regime), the IOF on operations up to R$ 30,000 now reaches 1.95% per year, an increase compared to the previous rate of 0.88%. Furthermore, purchases abroad with credit cards, acquisition of foreign currency, and short-term external loans, previously exempt, had been announced with a rate of 3.5%. For FecomercioSP (São Paulo Federation of Commerce), the combined effect of these increases will have negative consequences for the Commerce, Services, and Tourism sectors. By making credit more expensive, the measure inhibits new investments and tends to force the passing on of costs to the end customer. The result is a contraction in consumption, precisely at a time when the economy is still struggling to recover from persistent inflation.
For startups that use convertible loans or seek international funding, the cost of raising capital has become higher, discouraging investors and complicating investment rounds. The attempt to tax foreign investments at a rate of 3.5%, although revoked by Decree No. 12,467/2025, generated distrust in the market. This unpredictability affects long-term contracts, especially those without rebalancing clauses, which can become burdensome. The increase in the Tax on Financial Operations (IOF) will cost up to R$ 19,900 for every US$ 100,000 moved by companies in remittances abroad, according to an estimate made by XP via InfoMoney.
The impacts go beyond the financial. Compliance with the new rates requires complex adjustments, such as the reconfiguration of accounting systems and the revision of international contracts, increasing operational costs. For startups outside major centers, access to credit is already more difficult, and the increase in IOF exacerbates this situation. The combination of higher costs and legal uncertainty creates a hostile environment, in which fiscal and regulatory risk becomes as challenging as market validation.
In this challenging scenario, some legal and structural solutions can mitigate the effects of the increased tax burden. One solution lies in raising capital from individual investors, who, under certain contractual structures, can still operate with a lower tax burden than that imposed on transactions between legal entities. Another alternative is the diversification of financing instruments and the strategic use of corporate structures that guarantee greater legal and tax flexibility, always with adequate legal backing.
Therefore, the increase in IOF (Tax on Financial Operations) is more than a fiscal adjustment; it is a setback that compromises the market in general and especially the startup ecosystem in Brazil. For these companies, which operate with tight margins and depend on agility, the cost of fiscal and regulatory risk is a critical obstacle. Brazil must decide whether it wants to be a hub of innovation or continue penalizing risk-taking with short-term measures. By 2025, the challenge is evident: the barriers for entrepreneurs are only increasing. Instead of creating an environment conducive to innovation, the state system itself has contributed to instability and insecurity. A globally competitive ecosystem cannot be built on uncertainties and the persistent "Brazil risk".
