Brazil’s federal government has closed a significant chapter in long-running tax litigation as Itaú, Santander, and Citi reach agreements to resolve Brazilian tax disputes, generating billions in fresh revenue for the public purse.
Brazil’s National Treasury Attorney General’s Office (PGFN) recently finalized settlement agreements with leading lenders Itaú, Santander Brasil, and Citibank. Together, the deals resulted in approximately 2.4 billion reais (around $458 million) in tax payments collected over recent weeks.
According to Mariana Lellis, chief negotiation coordinator at National Treasury Attorney General’s Office (PGFN), the figure represents net revenue after average discounts of about 21% applied to fines, interest, and penalties. These settlements bring an end to legal battles that had dragged on for years and provide an immediate boost to Brazil’s federal fiscal results.
Importantly, the total amount raised could still increase. Roughly 70 additional settlement requests from other companies remain under PGFN review, suggesting more revenue may be on the way.
How the Agreements Were Reached
The recent deals were negotiated under Brazil’s Integral Settlement Program (PTI), whose proposal submission deadline closed in December. Even so, outstanding applications are still being assessed by authorities.
Discounts offered under the program varied between 10% and 30%, depending on factors such as the likelihood of debt recovery, the stage and length of litigation, and the government’s prospects in court. As Lellis noted, there remains “a much larger universe of financial institutions and a much larger stock of debt” still awaiting evaluation.
Details of the Bank Settlements
A significant portion of the disputes stemmed from Brazil’s now-defunct financial transactions tax (CPMF). In those cases, Santander Brasil paid roughly 1 billion reais after discounts, while Citi settled for about 400 million reais.
Itaú’s situation was more complex. Its cases involved PIS and Cofins taxes levied on financial revenues. Although the government ultimately prevailed on the issue at Brazil’s Supreme Court, uncertainty around how the ruling’s effects would be applied prompted PGFN to pursue a negotiated settlement. Itaú’s agreement also covered income tax and CSLL obligations, bringing its total payment to around 1 billion reais.
Beyond the major lenders, PGFN also resolved a PIS/Cofins dispute with the regional development lender Banco de Desenvolvimento de Minas Gerais (BDMG), which paid approximately 140 million reais.
All four institutions settled their obligations in cash between late December and early this year. In a statement, Itaú said it “maintains ongoing dialogue with the competent authorities and uses the legal instruments available for resolving tax disputes, always with full transparency and compliance with current legislation.” The other banks did not immediately comment.
Exchange rate reference: $1 = 5.2387 reais.
