Study says agribusiness could supply the industry with ample feedstock
Biomethane production remains concentrated in developed countries. Emerging economies, however, also have opportunities because of their available feedstock, particularly agricultural and livestock waste, according to a study by Brazilian researchers supported by the Low Carbon Mobility Institute (MBCBrasil).
The study found that gas produced by biodigesting waste could provide emerging economies with a renewable transportation fuel that supports their climate goals, energy-diversification strategies, circular economies, and rural development.
The study, “From Waste to Wheels—Turning Organic Waste into Renewable Fuel for Transport,” was written by researchers Glaucia Mendes Souza of the University of São Paulo (USP), Clayton Barcelos Zabeu of the Mauá Institute of Technology (IMT), Heitor Cantarella of the Campinas Agronomic Institute, and Luiz A. Horta Nogueira of the Federal University of Itajubá. They compiled research to highlight the potential for biomethane adoption worldwide.
According to the document, today’s most mature biomethane markets are all in developed economies, including Sweden, Germany, Italy, France, the Netherlands, Denmark, Finland, Switzerland, the United Kingdom, Norway, and California. Other markets are expanding, including Brazil, the United States, China, India, Spain, Ireland, Austria, and Belgium. Biomethane is produced in approximately 40 countries and used as a fuel in about 30 markets.
The researchers said data from the International Energy Agency (IEA) show that the largest untapped opportunities for biomethane production are precisely in regions with substantial agricultural production, livestock farming, and urban growth, including Latin America, Sub-Saharan Africa, and South and Southeast Asia. Global production potential for biogas and biomethane is 1 trillion cubic meters a year, equivalent to about one-quarter of worldwide gas demand.
The availability of feedstock for biomethane production “is linked to economic development and population growth. As emerging economies expand their agricultural production and urban populations, the volume of organic waste they generate also increases,” the study said.
The researchers listed the main feedstock types and the countries with the greatest potential to use them. Animal manure is abundant in Brazil, India, China, and Argentina. Brazil, India, Thailand, and Indonesia have large volumes of agricultural residues. In contrast, Latin America and Southeast Asia have abundant agro-industrial waste.
Among nonagricultural sources, China, India, and Indonesia have the potential to use municipal organic waste, while landfill gas and wastewater sludge offer significant potential in large urban centers in emerging economies.
The researchers emphasized that countries such as Brazil, India, and China “already have experience adapting biomethane technologies to conditions in developing countries and can provide valuable lessons for other emerging markets.”
To encourage the biomethane market, the study cited countries that have adopted individual policies or combinations of measures, including fuel-blending mandates, sector-specific renewable-energy targets, physical infrastructure development, and financial or tax incentives.
The researchers also cited a study by the IEA, the Food and Agriculture Organization of the United Nations (FAO), the Global Bioenergy Partnership (GBEP), and the European Biogas Association. It found that many biomethane projects succeed by making their other products—such as biofertilizers—and environmental services—such as carbon credits—economically viable. Additional revenue streams for a biomethane project may include waste-management services, biofertilizer, renewable carbon dioxide, carbon credits, and guarantees-of-origin certificates. According to the study, these additional sources can account for between 20% and 60% of a biomethane project’s total revenue.
Justice Flávio Dino asks for more time after tense session, potentially pushing decision beyond October election
Supreme Court justices (from left): Flávio Dino, André Mendonça, Alexandre de Moraes, Dias Toffoli and Gilmar Mendes — Photo: Gustavo Moreno/STF
Brazil’s Supreme Federal Court (STF) suspended its session Tuesday (Sept. 15) without reaching a decision on a Federal Police report containing messages sent by former banker Daniel Vorcaro, owner of Banco Master, to a mobile phone number attributed to Justice Alexandre de Moraes. Justice Flávio Dino asked for more time to review the case.
The session was consumed by arguments among the justices and a procedural motion filed by Gilmar Mendes seeking to have the case considered alongside Moraes’s request for an investigation into Justice André Mendonça for alleged abuse of authority. As a result, the court never reached the central question of whether Moraes should be investigated.
Dino has up to 90 days to return the case for consideration. If he uses the full period allowed under court rules, the proceedings would resume, at the earliest, in early December. Justices consulted by Valor said Dino is unlikely to seek to put the case back on the agenda before the October elections.
At the start of the session, Justice Kassio Nunes Marques recused himself, a move that could alter the balance when the court eventually considers the merits of the case — whether Moraes should be investigated.
Nunes Marques cited his position as president of the Superior Electoral Court (TSE), saying he had no doubt the proceedings could affect the electoral process. Justice Dias Toffoli again stepped aside, as he has in all Banco Master cases since business ties emerged involving a fund linked to Fabiano Zettel, Vorcaro’s brother-in-law.
Dino requested more time after an argument between Justices Mendes and Mendonça — one of several heated exchanges during the session. He said the atmosphere in the courtroom made it impossible for the justices to deliberate, noting that Brazil was only days away from a presidential election.
“We are speaking in terms that degrade the Court’s image. Your Honor has been watching this for hours. If Your Honor is going to keep watching, I will not. We are in no position to deliberate. The atmosphere is only going to get worse, and society is watching,” Dino told Chief Justice Edson Fachin.
Even after Dino requested more time, the justices continued casting votes on the procedural motion. The session ended with a 4-3 vote against considering the two cases together. Fachin, who is overseeing the Moraes case, was joined by Luiz Fux,Mendonça and Cármen Lúcia.Cristiano Zanin, Mendes and Moraes voted in favor of combining the proceedings.
Dino had earlier supported considering the cases together but withdrew his vote after requesting more time to review the matter.
Courtroom clashes
The session featured repeated accusations and direct confrontations, particularly between Mendonça and some of the court’s more outspoken members, including Moraes and Mendes.
The most heated exchange came after Prosecutor General Paulo Gonet, who is also mentioned in the Federal Police report over alleged ties to people connected with Banco Master, defended himself.
“It is astonishing that someone of Paulo Gonet’s stature is subjected to this kind of insinuation. This is what is reckless [on Mendonça’s part]. A man driven by a policing mentality, alongside his police chiefs. The shamelessness of this man is astonishing,” Mendes shouted.
“The shamelessness is yours, Your Honor. Respect me. Respect me. This is not a joke,” Mendonça shouted back.
“Go ahead and cry, go ahead and cry,” Mendes replied.
“I’m not crying. There’s no crying here. Show some respect,” Mendonça said.
In another clash between the two, Mendes accused Mendonça of taking a “political-electoral” approach to the Banco Master case.
“There is an unmistakable political-electoral bias in the way this matter was handled. An obvious political-electoral approach. You don’t do that. Decent people don’t do that,” Mendes said.
Mendonça fired back.
“Your Honor is being reckless, Justice Gilmar. Don’t point your finger at me. You are not speaking to just anyone. Respect this Court.”
At another tense moment, Mendonça said there was a “parallel Federal Police” responsible for allegedly monitoring Supreme Court justices.
“We now have a parallel Federal Police. A parallel Federal Police carrying out surveillance. Don’t think you’re safe either, Justice,” Mendonça said.
Moraes then said he himself had been investigated at Mendonça’s direction.
“Who is afraid of the Federal Police? Who called the Federal Police and demanded that a colleague be included in a cooperation agreement? And we will bring that here, Chief Justice. We will bring it here and call witnesses, whom I will name,” Moraes said.
Moraes described the Federal Police report mentioning him as a “fraudulent investigation” carried out by Mendonça.
“Everything that was done, this fraudulent investigation into me, began long ago. Justice André, in a meeting, said: ‘Include Justice Alexandre.’ Why? Because he is serving a political group that tried to stage a coup in this country,” Moraes shouted, as Mendonça repeatedly said: “That’s a lie.”
Mendonça was appointed to the Supreme Court by former President Jair Bolsonaro, who is serving a prison sentence after being convicted over an attempted coup.
Mendonça argues that when he asked the Federal Police to identify the recipients of Vorcaro’s messages, he did not know Moraes’s name would emerge. He said he requested the report because the messages mentioned Gonet and Federal Police Director General Andrei Rodrigues.
Fachin’s handling
Fachin’s management of the case also drew criticism from fellow justices.
Moraes said there was nothing for the court to vote on because neither the Federal Police nor the Prosecutor General’s Office (PGR) had requested an investigation into him, which he argued would make the opening of a formal inquiry impossible.
“Is there any request to investigate me? No. What exactly are you going to vote on?” Moraes asked.
Dino, meanwhile, criticized Fachin for taking over the case himself, arguing that the move upset the balance among the Supreme Court’s members.
“This is a court of equals, and so we have to follow the rule. And the rule says that in no court in the country may a president remove a rapporteur,” Dino said.
Cármen Lúcia’s dismay
Cármen Lúcia remained silent for almost the entire session, speaking only when it was her turn to vote on Mendes’s procedural motion.
She said she was in a state of “deep consternation and sadness” over the situation facing the Supreme Court.
“I’m sad. Not only because of the issue that brings us here, but because this Supreme Court has caused civic unease among all Brazilian citizens. I even feel ashamed that, 20 days before the election, everyone’s attention is focused on Supreme Court matters,” she said.
Gonet’s response
In a separate development Tuesday, Gonet submitted a statement to the Federal Prosecution Service’s Superior Council calling “preposterous” claims that he should not remain involved in the Banco Master case.
He also named other authorities who attended a 2024 event in London where he acknowledged having encountered Vorcaro.
“The invited authorities took part in panels over the course of the event. There were also moments when attendees socialized. It was only then, and together with several other guests, that I was with Mr. Daniel Vorcaro. It was in that single context that I met him in person (the only time up to then and to this day). Again, at the time, there was nothing public about illegal activities by Banco Master or its executive. Nothing of the sort had come to my attention,” Gonet said.
The Federal Police report made public by Mendonça earlier this month shows Vorcaro seeking information, allegedly from Moraes, about the investigation into him that would lead to his first arrest, ordered in November last year.
The former banker was also seeking protection. In the messages, for example, he asked whether “Andrei” and “Paulo” could intervene on his behalf. Shortly before his arrest was ordered, he asked whether he should leave the country.
The Federal Police document also said Moraes edited a R$131 million legal-services agreement between Vorcaro and attorney Viviane Barci, the justice’s wife. Investigators said the metadata from the digital document identified a username linked to Moraes as the author of the last change made to the draft.
*By Giullia Colombo,Tiago Angelo,Mateus Coutinho,Gabriela GuidoandMariana Andrade— Brasília and São Paulo
Executives at Valor 1000 winners say fiscal adjustment, greater predictability are essential for investment and growth
Valor 1000 awards ceremony honored leading companies across 28 sectors, with Itaú named Company of the Year — Photo: Felipe Gabriel/Valor
Two recurring issues on the corporate agenda have taken on greater urgency. One is the consumption tax overhaul, which enters a new phase in 2027 and aims to implement a simpler, more efficient system—which has long been needed—by 2033. The other is the adjustment of public finances, another essential item on the agenda, which is in a different position: its implementation remains uncertain, despite being part of the election debate.
These two issues, which have always been crucial to the quality of Brazil’s business environment, rank among the main concerns of the country’s largest companies, according to the Valor 1000 ranking, whose winners were honored Tuesday (8) at an event at the Unique hotel in São Paulo.
Serasa Experian compiled the ranking in partnership with Valor and Época Negócios. FGV/SP’s Center for Financial Studies validated the survey criteria.
The resilience of Brazilian companies, which continued to grow revenue despite a challenging environment, was highlighted by Frederic Kachar, CEO of Editora Globo and Sistema Globo de Rádio. He stressed how difficult it is for short- and medium-term interest rates to decline in real terms as long as public debt remains high. For Kachar, the lack of a substantive debate over fiscal adjustment in the presidential campaigns is a source of frustration. “This issue can no longer be postponed. Fiscal adjustment is necessary,” he said.
“In Brazil, we are facing institutional crises and challenges that need to be addressed urgently,” said Maria Fernanda Delmas, editorial director of Valor and Editora Globo’s business and economics brands, in opening the event.
“The work of the companies we are honoring today is an integral part of people’s lives and of building a country. We know this is an ongoing process, with successes and mistakes, and that it is subject to our critical coverage as a way of contributing to a better society. It can also inspire many other businesses and professionals to follow a better path,” she said. “We seek to look at companies’ financial health, but also at the broader responsibility of each corporation—its commitments to the communities where it operates, consumers, employees, public authorities, suppliers and other partners, the environment, and investors.”
Executives at the winning companies assess the current environment from this broader perspective.
“Social policy and fiscal policy have to go hand in hand. The more disciplined you are fiscally, the more you can control inflation and create room for social programs,” said Milton Maluhy Filho, CEO of Itaú Unibanco, the 2026 Company of the Year and winner in the financial sector.
The executive said public finances should be at the top of every presidential candidate’s priorities. “Whoever wins the election needs to urgently propose a budget reform, make the budget more flexible, eliminate a large portion of fixed spending, and tackle this problem. We need to create room to cut spending and better prioritize investment,” he said. “This will require action by the executive and legislative branches and by society as a whole. That would create room for private credit, both domestic and foreign, so that we can start talking about productivity.”
The trajectory of public debt is a concern for industrial executives. Gustavo Werneck, CEO of Gerdau—the winner in the steel and metals sector in the Valor 1000 ranking—issued a strong warning. “The lack of fiscal adjustment puts pressure on interest rates and inflation. We are approaching a point of no return. Government officials and those seeking office can no longer simply talk about it. We cannot enter 2027 without a commitment to fiscal adjustment focused on reducing public spending,” he said. “Without adjustment, there is no public investment. Without economic growth, companies won’t invest. It is a fundamental issue for Gerdau’s investment decisions.”
Alberto Kuba, CEO of WEG, the top-ranked company in the machinery sector, shares that view. He noted that the company works with long-term plans but expressed concern about the current environment. “Without fiscal adjustment, perceptions of [high] country risk will persist.”
For Henrique Fernandez, CEO of Intelbras, the winner in the electronics sector, putting public finances on a sounder footing is imperative. “Without it, interest rates will remain high for longer, making credit more expensive, curbing consumption and delaying investment decisions,” he said. “High interest rates that persist for a long time mean more selective demand and longer decision-making cycles among customers,” the executive said.
Valter Pitol, managing director of Cooperativa Agroindustrial Consolata (Copacol), the top-ranked company in agribusiness, sees a challenging outlook despite the company’s strong results. “For 2027, we see a lot of fiscal uncertainty, a higher cost of capital, and a weaker real,” he said. According to Pitol, a deterioration in the fiscal outlook could lead Copacol to postpone planned investments.
The concern cuts across industries. Diogo Corona, CEO of Smart Fit—the winner in specialized services—said fiscal policy affects the entire economic backdrop, including interest rates, inflation, the exchange rate, and overall confidence. “A more predictable environment helps support investment and consumption decisions,” he said.
“We need interest rates to be less restrictive,” said Leonardo Mesquita, co-CEO of Cury Construtora, the winner in real estate development. “Once interest rates return to more normal levels, we will be able to make investments with a longer-term view.”
Executives say greater predictability would be especially welcome at a time when companies are undergoing significant adjustments because of the ongoing tax overhaul.
The introduction of the Contribution over Goods and Services (CBS) will require changes to billing, accounting, and procurement processes at Sabesp, the winner in the water, sanitation, and environmental services sector. “The main challenge will be managing the transition safely while maintaining operational continuity and the quality of tax information,” said CEO Carlos Piani.
Éder Odvar Lopes, CEO of Inpasa, the top-ranked company in bioenergy, sees the tax overhaul as a historic transition. He said the biggest hurdle could be the regulation of special regimes, including regional tax incentives. “For a company operating in several states and with extensive supplier networks, the main task is adapting systems, tax processes, contracts, and financial flows to the new model,” he said.
Marcelo Oberg, CEO of Sotreq, the top-ranked company in wholesale and foreign trade, said the biggest test is not adapting to new tax rates and levies but preserving working capital. “It is essential to have mechanisms ensuring that the stock of tax credits from the previous system, particularly ICMS [state value-added tax], can be recovered so companies can maintain healthy cash flow,” he said.
At RD Saúde, which owns the Droga Raia and Drogasil pharmacy chains and won in retail, the preferential tax treatment provided for certain medicines is viewed as a step forward. “The measure could help expand access to and adherence to treatment, particularly among patients with chronic conditions,” said CEO Renato Raduan. “We are well advanced on this agenda, with our systems and processes being prepared to ensure a safe and proper transition to the new model,” he said, describing the reform as structurally positive.
André De Angelo, CEO of Acciona Brasil, the leader in construction and engineering, highlighted the impact of the tax overhaul on long-term concession contracts. “These contracts will span different tax regimes over their terms,” he said. “That affects financial models and requires mechanisms to restore the economic and financial balance of contracts with the granting authorities.”
According to Carlo Bergamaschi, executive director of Valgroup, the winner in plastics and rubber, the transition is highly demanding, particularly for a company operating in several states with a complex value chain. Changes to the rules and implementation timelines for different stages of the overhaul add to the complexity. Even so, he is optimistic. He believes the new system could bring significant improvements, such as reducing tax evasion and informality—“which means a fairer competitive environment,” he said.
The 2026 edition of the ranking assessed 1,034 companies based on financial performance. In a second stage, the highest-ranked companies were evaluated using ESG criteria—environmental, social, and governance practices—to determine the leaders in 28 sectors of the economy.
In a year marked by numerous challenges—from high interest rates and rising debt at home to wars that have severely disrupted global supply chains and heightened geopolitical tensions—these companies managed to grow both revenue and profit.
The Valor 1000 awards are organized by Valor Econômico and Época Negócios, with gold sponsorship from Alelo, Caixa Seguridade, Huawei, and Deloitte; silver sponsorship from FGV Educação Executiva, Vibra, MBRF, Febraban, and XP; and bronze sponsorship from Intelbras, CNI Sistema Indústria, Sicredi, and Mineração Taboca. Azul is the event’s official airline, and GAC is its official vehicle partner, with support from FIESP and Eletromidia and partnerships with Serasa Experian and FGVcef/FGV-SP.
Partnership will be structured through the Canadian company’s new Brazilian subsidiary
Canadian mining company Aclara Resources announced Tuesday (8) that it has signed a contractual joint venture agreement with the Japan Organization for Metals and Energy Security (Jogmec) to explore and develop deposits of heavy rare earth elements in ionic clays in Brazil. The partnership will be structured through a new Brazilian subsidiary of the Canadian company.
In a market filing, Aclara clarified that the Carina project, its flagship asset in the state of Goiás and scheduled to begin operations in 2028, will remain outside the joint venture and continue to be wholly owned by the company.
Jogmec is responsible for securing strategic natural resources for Japan and is the same organization that signed a memorandum of understanding with the government of Goiás in March to cooperate in the research, technology, and exploration of critical minerals and rare earths. That same month, the state signed another agreement of this kind with the U.S., a memorandum that was questioned by members of the federal government.
Under the agreement with Aclara, Jogmec will exclusively finance up to $3 million in exploration expenses during an initial three-year earn-in period. If certain conditions are met, the Japanese organization may elect to invest an additional $1.5 million, extending the investment period by another year.
Jogmec will also have the option to acquire a 30% stake in one of Aclara’s exploration projects in Brazil if it fulfills all of its financial commitments. Once the 30% partnership is established, all future development costs for the selected project will be shared proportionally by the two partners, according to Aclara’s statement.
If it exercises the option to acquire the 30% stake in the selected project, the Japanese organization will also secure the right to purchase an amount of production equivalent to its 30% stake, plus an additional 10% share of the project’s future output. The purchases will be made on normal commercial market terms to support the project’s long-term financing and development.
According to Aclara, Jogmec may also transfer its stake and associated purchase rights to one or more Japanese companies or consortia, subject to the terms and conditions of the joint venture.
“The agreement also creates a natural pathway for future offtake agreements with Japanese companies through Jogmec’s priority rights,” Aclara CEO Ramón Barúa said in a press release. “As new discoveries are made, they have the potential to strengthen the resource base supporting our company’s vertically integrated rare earth supply chain.”
Under agreement, Jogmec will finance up to $3m in exploration expenses during initial three-year period — Photo: Victor Moriyama/Bloomberg* By
Michael Esquer, Valor — São Paulo Source: Valor International
https://valorinternational.globo.com/
Six major chains keep lending growth below inflation and provisions broadly stable, but shorter-term arrears are increasing faster than overall delinquencies
At Centauro, overdue balances rose sharply in the 31-to-60-day range in the first half of 2026 — Photo: Divulgação
Brazil’s largest retail chains have kept a tight rein on credit this year, limiting financing to customers to protect themselves against the risk of consumer defaults. The strategy has helped prevent a rise in provisions for credit losses.
Six retailers with combined annual gross sales of just over R$120 billion had R$40 billion in consumer credit outstanding in the first half, Valor calculations show. In real terms, after adjusting for inflation, their combined loan book shrank 1.2%.
Despite the conservative approach, this year’s figures show that shorter-term delinquencies, of up to 90 days, are rising faster than overall overdue balances—a potential warning sign for retailers.
Credit restraint
The findings are based on a Valor survey of first-half financial statements from publicly traded fashion, electronics and sporting-goods retailers. The analysis covered provisions for doubtful accounts, total overdue balances, delinquencies of more than 90 days and the size of each company’s overall credit portfolio in Brazil.
The companies included home-appliance, electronics and furniture retailer Casas Bahia, omnichannel retailer and marketplace Magazine Luiza, Grupo SBF’s sporting-goods retail chain Centauro, and fashion retailers C&A, Renner and Riachuelo. Valor selected them because they are the publicly traded retail groups with consumer-finance operations. Food retailers and drugstore chains generally do not offer longer-term installment plans.
The six chains had a combined credit portfolio of R$40.95 billion at the end of June, up 3.43% from a year earlier. That was below the 4.64% inflation rate over the same period, as measured by the IPCA consumer price index.
Provisions for doubtful accounts were virtually unchanged at R$3.7 billion. They were stable or lower at Magazine Luiza, Casas Bahia, Renner and Centauro, while increasing at C&A and Riachuelo.
Total overdue balances across the retailers rose 6.7% from a year earlier to R$9.81 billion in the first half.
That increase was faster than the rise in accounts overdue by more than 90 days. In that category, outstanding balances grew 3.5% to R$6 billion, broadly in line with the expansion of the overall credit portfolio.
The figures suggest that more recent delinquencies are putting greater pressure on the overall level of late payments.
Looking at individual companies makes the deterioration in consumers’ ability to keep up with payments more apparent.
Early arrears
At fashion retailer Renner, for example, balances overdue by 31 to 89 days rose 14.8% to R$1.5 billion. By contrast, amounts overdue by up to 30 days fell 7.6% from a year earlier.
“This suggests that consumers start paying for a recent purchase and then, after the first month, begin falling behind on installments,” said a former commercial director at a department-store chain.
At Centauro, balances overdue by 31 to 60 days increased twelvefold to R$4.7 million. In the 61-to-90-day range, the amount quadrupled to R$3.1 million, the company’s so-called aging list shows (the figures are net of provisions for expected credit losses). The figures are net of provisions for expected losses.
For comparison, the total amount more than one day overdue also rose sharply, though at a slower pace. It more than tripled, from R$5.1 million in June 2025 to R$16.8 million in June 2026.
Casas Bahia, which has been under court-supervised restructuring since August, has long relied on installment financing as one of its strengths. The company saw overdue balances on its store-financing plans rise 34.5% in the 61-to-90-day range. Amounts overdue by 31 to 60 days increased 27.1% in the first half of 2026 from a year earlier.
Among all the delinquency periods analyzed, ranging from six to 180 days, those two brackets showed the steepest increases in overdue Casas Bahia installments.
Overall delinquencies in the retailer’s credit portfolio rose at a slower pace, though the increase was still significant. Total overdue balances climbed 24.7% to R$1.7 billion in the second quarter of 2026 from a year earlier.
In its financial statements, Casas Bahia said it continues to monitor conditions cautiously and maintain a conservative approach, “ensuring the strength and sustainability of the portfolio.”
The retailer told Valor that delinquencies had risen more sharply in the early and intermediate stages, but said lower insolvency rates at longer maturities were a positive sign. It also said its delinquency rate increased from 8.4% in the second quarter of 2025 to 8.9% a year later, an increase it views as broadly stable.
Conservative lending
Renato Donatti, a senior director at Fitch Ratings, said Brazilian retailers have tightened lending standards in recent years after higher interest rates drove up the cost of capital. The aim has been to avoid taking on excessive default risk, a strategy that has helped keep the sector’s credit portfolios from becoming unbalanced.
Some retailers operate their own finance companies, while others have partnerships. Renner owns Realize, Riachuelo operates through Midway, and Magazine Luiza holds 50% of Luiza Cred, with Itaú Unibanco owning the other half. Among privately held chains, department-store chain Pernambucanas owns Pefisa.
Still, Donatti said store financing remains one of the few sources of credit available to some consumers.
“There is a consumer who is outside the banks’ radar, and retailers need to provide capital to that person for the sale to happen. The issue is that a more conservative approach became necessary, especially among finance companies linked to retailers,” he said.
Donatti expects these businesses to remain cautious when originating credit, adjusting limits and repricing risk while continuing to prioritize asset quality and profitability.
Riachuelo strategy
At Riachuelo, which Fitch sees as currently having a less restrictive credit policy than its peers, provisions for doubtful accounts rose faster than the average among the six retailers surveyed.
Its 15-to-90-day delinquency rate, however, was stable from April through June at 3.8%, while the rate for balances more than 90 days overdue increased from 26.8% to 28.4%.
Net provisions after recoveries and discounts represented 5.1% of the total portfolio, compared with 5.3% a year earlier. The slight decline in the ratio reflected faster growth in the portfolio.
“This result highlights improved provisioning efficiency as the portfolio expands,” Riachuelo said in a statement to Valor.
Asked whether it would maintain its strategy in the near term despite high interest rates and heavily indebted households, Riachuelo said improvements in its credit models allow it to expand lending. The company pointed to better delinquency indicators at shorter maturities, in contrast with some other chains.
“We intend to maintain this dynamic, while still taking a conservative stance, adjusting supply based on our reading of the market and the performance of new vintages.”
C&A provisions
C&A increased its provisions against credit losses by 22%, from R$52.1 million in June 2025 to R$63.7 million a year later, while its credit portfolio grew 6%. Total overdue balances increased slightly faster, by 7.3%.
Credit-card delinquencies reached 15.4% from April through June, the highest level since the third quarter of 2024 for balances more than 90 days overdue.
Still, the company’s overall delinquency rate fell to 4.4% in the second quarter of 2026 from 4.8% a year earlier. Net credit losses after recoveries also edged down 0.9%.
Asked whether it planned to maintain tighter lending standards, C&A gave no indication of a shift.
“We have internal models that help us forecast future delinquency and, based on that, since last year we have made adjustments to our lending policy in anticipation of this deterioration in the macroeconomic environment,” the company said in a statement to Valor.
C&A added that it seeks the best possible balance between serving customers and protecting profitability. Its figures show net revenue rose 1% in the first half, while gross margin increased 1.5 percentage points to 57%.
Sales trade-off
Retailers could theoretically expand credit to support a stronger sales recovery this year. All major publicly traded fashion chains saw revenue growth slow during the World Cup quarter.
For now, however, the high cost of getting that decision wrong has pushed the option aside.
Renner said in a statement that a more aggressive lending policy could provide some short-term benefit to sales, but that the gain would not compensate for greater vulnerability in a difficult macroeconomic environment. The company said conditions would need to improve consistently before it reconsidered its policy.
The fashion retailer kept its credit assessments cautious this year, helping reduce its portfolio by 1% from a year earlier to R$6.4 billion as of June. Its provisions for doubtful accounts were also stable.
But the more recent portion of its delinquent portfolio deteriorated: balances overdue by 31 to 89 days rose from 20.9% of the relevant portfolio in June 2025 to 24.2% in June 2026.
“We remain conservative in extending credit. Although delinquency is under control and our short-term indicators remain healthy, the macroeconomic environment still calls for caution, particularly among the most financially pressured income groups,” the company said.
Magalu portfolio
Magazine Luiza has taken a broadly similar approach. Its credit portfolio grew just 1.8% from a year earlier to R$20 billion as of June, below inflation, while provisions declined 0.9%.
Total overdue balances also accounted for a smaller share of the portfolio, falling by just over 10% in a year. Unlike at the other retailers, short-term delinquencies of 15 to 90 days declined.
The cautious credit stance has an impact on sales, given the sector’s heavy reliance on financing to support growth. But for Magazine Luiza, that trade-off is consistent with its current strategy of pursuing growth while prioritizing profitability.
Deal follows agreement between government and congressional leadership that also unlocked other priorities; however, concentrated legislative push ends without constitutional amendments finalized
Congress exempts from taxes foreign purchases up to $50 — Photo: Carlos Moura/Agência Senado
Brazil’s Congress voted to make permanent a presidential decree (MP) on Thursday (3) exempting foreign purchases of up to $50 from federal taxes—better known as the “blusinhas tax.” The move delivers on an agreement between President Luiz Inácio Lula da Silva (Workers’ Party, PT) and the presidents of the Senate, Davi Alcolumbre (Brazil Union of Amapá), and the Chamber of Deputies, Hugo Motta (Republicans of Paraíba).
Alongside the blusinhas measure, the talks also covered approval by the Senate’s Constitution and Justice Committee (CCJ) of proposed constitutional amendments (PECs) on public security and the six-day workweek.
The legislative process, however, was neither smooth nor fully complete. The public-security PEC, for instance, advanced only as far as approval of its main text, with three amendments still pending; the proposal isn’t expected to return to the floor until after the elections. The “blusinhas” vote, originally scheduled for Tuesday (1), required lengthy negotiations over compensation for affected sectors. There was also some expectation that the 6×1 proposal might reach the floor, though Alcolumbre had made no commitment to that effect.
The week’s results underscored both the administration’s ability to coordinate with congressional leadership and the limits of that coordination. The government managed to advance an agenda with strong political and economic appeal, while Alcolumbre and Motta delivered part of their agreement with Lula without committing to every subsequent step.
In the Senate especially, the partial progress of the two constitutional amendments showed that political agreement doesn’t guarantee floor approval. Still, concentrating votes during the “concentrated effort” week gave the government a measure of legislative visibility at a moment when it was rebuilding ties with leadership in both chambers.
The six-day workweek proposal cleared the CCJ and was sent to the floor under a special expedited timetable. The text cuts the maximum workweek from 44 to 40 hours and guarantees two paid days of rest, with no reduction in wages. A floor vote is now expected sometime between the first and second rounds of the elections.
The public-security PEC likewise advanced only partially. The CCJ approved the main text of the report by Senator Rogério Carvalho (PT of Sergipe) but left three amendments pending—among them a provision, since removed, that would have directed revenue from betting companies to public-security funds.
The blusinhas measure required even more prolonged negotiation, moving forward only after two days of talks over compensation for affected sectors. Its approval in both chambers stood as the week’s central legislative achievement. The Institute for Retail Development (IDV) said in a statement that it was “deeply concerned” about the measure’s passage, arguing that it restored “a serious asymmetry in the tax burden” between goods imported via foreign platforms and those manufactured in Brazil.
Beyond this package, Congress approved two additional provisional decrees during the week. One was the Move Brasil MP, launched in May alongside other initiatives aimed at audiences more sympathetic to the opposition.
It authorizes up to R$30 billion in financing to help taxi drivers and app-based drivers replace their vehicles and was expanded to cover school-transportation workers as well. After the loan program struggled to gain traction, the government had already extended the maximum financing term from 72 to 84 months and raised the maximum eligible vehicle price from R$150,000 to R$200,000.
Lawmakers also approved a provisional decree aimed at reducing case backlogs at the National Social Security Institute (INSS), capping off a week of concentrated legislative activity in which the government and congressional leadership advanced several proposals with significant political and social weight—even as some commitments were left for later.
Alexandre de Moraes’s request alleges abuse of authority and political targeting after André Mendonça unsealed a report citing messages from former Banco Master owner Daniel Vorcaro
Alexandre de Moraes — Photo: Brenno Carvalho / Agência O Globo
Supreme Court Justice Alexandre de Moraes has asked for fellow Justice André Mendonça to be investigated for alleged abuse of authority, administrative misconduct and impeachable offenses.
Moraes also accuses his colleague of compromising judicial impartiality and favoring political groups in investigations into Banco Master and fraud involving Brazil’s National Social Security Institute (INSS).
The request, sent to Supreme Court Chief Justice Edson Fachin, came two days after Mendonça unsealed a Federal Police report citing messages sent by former banker Daniel Vorcaro, Banco Master’s owner, to a contact attributed to Moraes. In the messages, Vorcaro sought to interfere with and obtain information about investigations that led to his arrest in November last year.
The episode triggered an unprecedented crisis at the Supreme Court, which has now intensified with the request for an investigation into Mendonça.
Mendonça did not immediately respond to requests for comment.
Call for investigation
Moraes used the so-called fake news inquiry, which he has overseen since 2019, as the basis for requesting the investigation.
In the decision sent to Fachin, Moraes said he ordered Federal Police Director-General Andrei Rodrigues on Tuesday (Sept. 1) to provide intelligence reports produced “in response to the need to document numerous irregularities and illegal acts” in the handling of Operation “Sem Desconto”, involving the INSS, and Operation Compliance Zero, involving Banco Master. The decision does not make clear whether the Federal Police produced the reports on its own initiative.
Moraes said the irregularities identified by the Federal Police indicated that Mendonça sought to “steer the production of evidence toward falsely accusing Supreme Court justices of crimes, expressly naming Justices Gilmar Mendes, Dias Toffoli, Luiz Fux, Alexandre de Moraes and Nunes Marques, as well as the prosecutor general and the director-general of the Federal Police.”
The information provided would also have shown a series of alleged irregularities, Moraes said, including the “usurpation” of the police authorities’ “control over the investigations,” improper handling of plea-bargain negotiations and the steering of investigations toward specific targets for political reasons. Those alleged targets included Moraes himself and Senate President Davi Alcolumbre (Brazil Union Party).
Evidence challenge
In addition to potentially leading to an investigation into Mendonça, Moraes’s request could result in evidence gathered in the Compliance Zero and Sem Desconto operations being invalidated.
Among other issues, Moraes challenges the chain of custody of the evidence — the set of procedures established under Brazil’s Code of Criminal Procedure governing how evidence collected in criminal cases must be handled, preserved, processed, stored and disposed of.
Moraes argues, for example, that measures ordered by Mendonça, such as granting early access to raw data extracted from devices before the Federal Police had filtered the material and verified its authenticity, breached the chain of custody and harmed “the criminal investigation, including by allowing several leaks.”
He said a Federal Police intelligence report found that Mendonça’s decisions in the two cases could, in theory, have amounted to “usurpation of the police authorities’ control over the investigations, with a clear loss of impartiality due to ‘growing indications of bias in the conduct of judicial oversight, reflected in increasingly intense thematic steering toward a specific investigative line,’ as well as a breach of the chain of custody of the seized evidence.”
Moraes also accuses Mendonça of acting for personal and political reasons. One indication, he argues, is that Mendonça allegedly steered the investigation toward particular targets, including Alcolumbre. Moraes also refers to himself in the third person in several passages of the decision.
“The Federal Police points to several actions by the reporting justice, André Mendonça, that, in theory, constitute administrative misconduct, impeachable offenses and abuse of authority, including the targeting of specific individuals for investigation for personal and political reasons, in an attempt to incriminate Justice Alexandre de Moraes and Senator Davi Alcolumbre,” one passage of the decision says.
Moraes says neither the Federal Police nor the Prosecutor General’s Office (PGR) accused him of committing crimes. He argues that Mendonça therefore sought to investigate him in an effort to uncover criminal offenses that could be used against him.
Fachin’s review
Shortly after Moraes’s order became public, Fachin requested information from Moraes, Mendonça, the PGR and the Federal Police about the report citing Vorcaro’s messages.
The measures are intended to establish the full circumstances surrounding the production of the report ordered by Mendonça on conversations found on Vorcaro’s phone that exposed his relationship with Moraes.
The chief justice wants to review all the information before submitting the report to the Supreme Court’s full bench to discuss what steps should be taken, including the possibility of opening an investigation into Moraes.
Among the information Fachin requested were details on compliance with the Judiciary Organic Law, any access to private documents or confidential information, and the circumstances surrounding a police operation. Fachin also wants clarification on the conditions under which Mendonça ordered the report to be produced.
Police presence
Before the crisis escalated, the court’s longest-serving justice, Gilmar Mendes, said he had suggested to Fachin that Federal Police officials be barred from working in justices’ chambers.
Mendes said such arrangements tend to influence the handling of investigations overseen by Supreme Court justices. He also said he considered such close relationships between investigators and judges inappropriate.
Four Federal Police officials currently work at the Supreme Court. Two are assigned to Mendonça’s chambers. Moraes is also assisted by one, while another works in the court’s security division.
On Thursday (Sept. 3), as he left the Senate chamber, Alcolumbre was asked about Moraes’s request concerning Mendonça. He said he was unaware of the decision.
“I don’t know anything about it. I don’t know what the decision was,” he said.
(Gabriela Guido contributed reporting.)
*By Tiago Angelo, Giullia Colombo and Mateus Coutinho — Brasília
Retailers Assaí, Casas Bahia, Dia and other industrial groups appear in investigation into alleged bribes to speed release of tax credits
Cash-and-carry retailer Assaí is among companies cited in the ongoing tax-credit investigation — Photo: Divulgação
São Paulo state prosecutors launched a new phase of Operation Icarus on Thursday (Sept. 3), targeting an alleged scheme involving retailers, manufacturers and service providers that illegally expedited the release of tax credits at the State Finance Department.
Documents obtained by Valor show that cash-and-carry food retailer Assaí, furniture, appliances and electronics retailer Casas Bahia, supermarket chain Dia and pharmacy chain Farma Conde are cited in the ongoing investigation. Prosecutors are examining allegations that bribes equivalent to 1% to 2.5% of the tax credits involved were paid through a retained lawyer, with the percentage varying by company.
Rumo, which operates in rail transportation and logistics, energy conglomerate Cosan, natural gas distributor Comgás, fuel distribution company Ipiranga, beverage group Ambev and Sony Mobile (electronics and mobile devices) are also mentioned as alleged beneficiaries of the scheme, which accelerated the release of credits related to ICMS-ST, the tax-substitution regime for São Paulo’s state tax on the circulation of goods and services (ICMS). Prosecutors are also investigating whether some companies paid to fabricate tax credits that did not exist.
Those companies were not directly targeted in Thursday’s operation. But an investigation is underway involving information from a plea-bargain agreement and access to public officials’ bank records, and prosecutors have been gathering additional information about the groups.
Operation Icarus is investigating an alleged scheme involving the fraudulent creation and release of billions of reais in ICMS tax credits in São Paulo state. The investigation began more than a year ago with pharmacy chain Ultrafarma and electronics and appliance retailer Fast Shop retail chains.
Law firm involvement
Most of the companies allegedly retained law firm Buttini de Moraes, which then arranged bribe payments to secure the release of tax credits in recent years, according to a São Paulo Public Prosecutor’s Office (MPSP) search-and-seizure filing obtained by Valor.
The law firm allegedly made cash payments in shopping-mall parking lots in São Paulo, with the money placed in archive boxes, as Valor’s website reported Thursday. The companies deny wrongdoing and say they were unaware of the investigation.
Thursday’s action included requests for the arrest of André Weiss, former executive director-general of tax administration at the State Finance Department, who held the position until May, and lawyer João André Buttini de Moraes, a partner at Buttini de Moraes, founded in 2018 and a central figure in the investigation involving the retailers.
Prosecutors believe Buttini handled most of the contracts under scrutiny to facilitate access to ICMS-ST credits that had been stalled at the Finance Department. The groups needed access to those credits to monetize them and remove them from their balance sheets, or to sell them to third parties.
The new phase of Operation Icarus involved the execution of 47 search-and-seizure warrants at homes, offices and businesses in the city of São Paulo, the metropolitan area, the state’s interior and Mato Grosso do Sul.
The court order also temporarily removed six suspects from public office, barred the 27 targets from contacting one another, required them to surrender their passports and prohibited them from leaving the country. Investigators are examining possible crimes involving a criminal organization, the offering and receiving of bribes, and money laundering.
The operation was carried out by the MPSP’s Special Action Group to Combat Cartels and Money Laundering (GEDEC).
“Investigators allege that the group turned a legitimate tax mechanism into an underground market in which not only taxpayers’ credits were traded, but also the administrative acts required for their recognition and release,” the MPSP said in a statement. “The improper payments allegedly corresponded to percentages of the tax credits, ranging from 1% to 10% in the cases under investigation.”
Assaí payments
Assaí appears in the investigation into alleged bribe payments intended to unblock, accelerate and approve ICMS-ST refund claims.
The retailer allegedly paid nearly R$53 million to lawyer João Buttini’s company BM Tax to obtain faster release of the credits, Valor found based on documents from the search-and-seizure filing.
The investigation also provides further details involving Casas Bahia and supermarket chain Dia. At all three companies — Casas Bahia, Dia and Assaí — the alleged bribes paid by Buttini ranged from 1% to 2.5% of the value of the tax credits.
The proceedings identified so far by the MPSP involve about R$800 million in Assaí credits under centralization procedures and R$97.7 million in two Dia cases cited in notes seized at the home of Paulo Siqueira Prado, a cooperating witness who has become a central figure in the investigation. Prado is a former regional tax chief at the Butantã tax office in São Paulo.
Prado provided information underpinning Thursday morning’s searches and the allegations involving the retail chains. He also said in his cooperation agreement that Buttini personally approached him at the Finance Department in 2023 to discuss the interests of taxpayer clients represented by his law firm.
Recordings of a 2023 lunch involving public officials described as operators of the alleged fraud scheme also include updates on tax-credit proceedings and references to the retailers.
Recorded conversation
Prosecutors are also investigating whether some companies paid to create fictitious tax credits that did not exist.
A recording of a lunch among public officials on July 27, 2023, was found on the cellphone of Artur da Silva Neto, the former head of the Finance Department’s tax division, who has since been removed from his position and arrested.
Those at the table included Silva Neto, cooperating witness Paulo Prado, André Weiss, a former directorf tax inspection, as well as a tax-inspection supervisor, an inspector from the Butantã tax office and a tax auditor.
At one point, the participants discuss the centralization of three major taxpayers and mention Via Varejo, now Casas Bahia, Dia and Sendas, or Assaí.
In the conversation, Silva Neto, whom investigators regard as the mastermind of the scheme within the Finance Department, asks Weiss which projects had begun with the chains. Prado then says one involved Via, or Casas Bahia, while work with Dia had “not even started yet.”
The tax supervisor then says that “a third one that is centralized there is Sendas.” Silva Neto responds that Sendas is the trade name and that “there’s an Assaí” — with the two referring to the same company.
“So I think we can sit down, check it and work it out,” Weiss says. Lawyers for Weiss, Prado and Silva Neto did not comment.
Alleged kickbacks
The MPSP’s ongoing investigation, based on documents gathered by prosecutors and Prado’s cooperation agreement, also says the cooperating witness told investigators he received from Buttini his share of an improper payment connected with services provided to Assaí.
“The payment was made through the issuance of 12 invoices to [poultry and food producer] Ad’oro S.A., simulating the provision of services by his company to that company,” the MPSP said in the court filing.
Investigators believe Ad’oro S.A. served as Assaí’s payment vehicle in its dealings with the law firm. Payments allegedly went from Ad’oro to BM Tax, which received R$37.5 million of the R$52.9 million Assaí paid in legal fees.
BM Tax’s revenue rose from R$5.5 million in 2019 to R$70.4 million in 2023.
The investigation also includes WhatsApp messages between a tax auditor and Prado referring to Assaí. In one June 2023 exchange included in the search-and-seizure filing, the auditor tells Prado that Buttini had sent him the filing for Assaí’s roughly R$800 million refund claim, which had been centralized under another auditor’s CNPJ registration.
Buttini allegedly asked that the case “stay in your NF,” or tax-audit unit, because they had already established “a good methodology with the team.”
MPSP documents also say public officials agreed among themselves on the bribes after ICMS credits were released.
“The setting of the bribe as a percentage of the amount to be refunded — 1% in Assaí’s case, 1.5% in the Via and Dia cases, 2.5% in the case of beverage distributor Metrópole, 3% as the lawyer’s share and 10% in the demand originating from the tax-substitution supervision unit,” prosecutors said in the filing.
“[This] is not an incidental detail: it demonstrates that the official act had a price,” the filing says.
Payment records
Based on a cross-check of 88,388 payment entries from 2018 through 2025, Buttini’s firm received R$140.6 million in service payments from Assaí, Via, Ipiranga and Metrópole, according to data in the court filing.
Assaí was the largest payer, at R$52.9 million, followed by Casas Bahia, with R$49.8 million of the R$140.6 million total.
In a statement, Assaí said it hired Buttini Moraes and BM Tax to provide tax and technology services because of the scale and complexity involved in processing tax data.
“The scope of the services included the processing of massive tax databases, the preparation of calculation records, the preparation of digital files required under the law and the regular administrative monitoring of the corresponding requests,” the company said.
Assaí also said it made no payments to public officials and neither requested nor authorized the offer of any improper advantage.
The company said ICMS-ST refunds are not a tax benefit, incentive or favor, but a right established by law and applicable when the tax is collected in advance. Assaí also said it had not been notified by authorities and had not been the target of any court measure or investigative action related to the operation.
Dia said it had not been contacted or notified by the MPSP and “does not condone any illegal practice or conduct that violates the law or its ethical principles”. The company said it acts with “integrity and transparency” and remains available to cooperate with authorities.
Casas Bahia did not comment.
In a statement, Buttini de Moraes’s defense said it was reviewing the investigation and the circumstances that led to the operation. It said that, “in full transparency and cooperation,” it would provide all necessary clarifications to the relevant authorities as soon as it had full access to the case files.
Analysts see risks for Lula and an opening for Flávio Bolsonaro, but say scandal-weary swing voters may prove harder to move
With a month to go before the first round of Brazil’s presidential election, the disclosure Tuesday (1) of messages involving Supreme Court Justice Alexandre de Moraes and former Banco Master owner Daniel Vorcaro is set to become a new factor in the race. The messages show the former banker seeking Moraes’s help and information about a confidential investigation that would eventually lead to Vorcaro’s arrest.
Analysts say the new Supreme Court crisis could energize the base of Liberal Party presidential candidate Flávio Bolsonaro and damage President Lula’s reelection bid. At the same time, candidates seeking to break through the country’s political polarization could also benefit.
Rafael Cortez, a political scientist and partner at consultancy Tendências, sees potential damage to Lula’s candidacy because an association between the president and the Supreme Court has increasingly taken hold in public opinion. Any negative effect, however, will depend on the opposition’s ability—particularly Flávio’s campaign—to deepen that perception.
“I see a potentially negative effect, but it is not a given. Strategically, Flávio’s campaign will have to exploit the issue politically so that voters do not turn the feeling that ‘the mainstream is corrupt’ into abstention, but instead into a vote for the opposition candidate.”
Cortez said the episode could hurt the government because some voters perceive an “informal alliance” between Lula and Supreme Court justices that has resulted in the persecution of Bolsonaro supporters. He therefore believes Flávio is likely to be able to capitalize politically on the issue, since his political movement was the first to embrace an anti-establishment message.
Cortez considers the election open and believes voter turnout will determine the outcome. In that context, the Supreme Court episode could motivate some voters dissatisfied with Lula who might otherwise stay home to turn out and vote. “The chances of major changes in the current landscape are low, but in a close election, small shifts are enough to change the outcome.”
The analyst said Lula faces a paradox: despite high disapproval ratings for his government, he remains ahead in voting intentions. Cortez said the explanation lies more in the opposition’s mistakes than in Lula’s own strength.
“If the government had positive approval ratings, we could say nothing would happen [as a result of developments in the Banco Master case at the Supreme Court], but that is not what is happening. The government’s position as favorite rests on shaky foundations and reflects voters’ lack of confidence in the opposition more than support for the president. He is leading, albeit by a narrow margin, despite voters not liking his government.”
With part of the electorate tired of polarization and lacking motivation to turn out, Cortez said the new allegations involving the Supreme Court could draw some of those voters away from abstention and toward Flávio. The political scientist noted that the senator is also the target of investigations related to the Banco Master case pending before the court. “What we are seeing, ultimately, is how the Supreme Court has become drawn into Brazil’s political radicalization. In voters’ eyes, the justices themselves have become political figures.”
Cortez said the episode could lead even some voters who have reservations about Flávio to conclude that criticism from Bolsonaro supporters about the court’s conduct may have some basis. “That could lead voters who disapprove of the government to migrate toward Flávio, making the race even more evenly matched,” he said. Lula’s campaign, Cortez added, could counter the issue by emphasizing its economic agenda, including a proposal to end the six-day workweek with one day off and its message of protecting lower-income Brazilians.
Other opposition candidates could also benefit if they manage to tap into anti-establishment sentiment among part of the electorate, Cortez said. “Those who are using criticism of the Supreme Court as an electoral strategy are likely to gain. Whether that will be enough to turn the race around is another matter.”
Graziella Testa, a political scientist and professor at the Federal University of Paraná, said previous political scandals suggest that the impact of cases like this depends less on the facts themselves than on which narrative ultimately takes hold and who comes to be seen as the “villain” or the “hero.”
Testa said Flávio, who has publicly maintained a confrontational stance toward Moraes, is likely to seek electoral dividends from the episode. She cautioned, however, that there is no automatic link between the case and any change in voting intentions.
According to Testa, criticism of the Supreme Court and some of its justices remains largely divided along partisan lines, particularly among groups on the right. “I don’t think someone who doesn’t know who they are going to vote for is worried about the Supreme Court. This is an issue that mobilizes committed right-wing voters,” she said.
When asked about a possible response from Lula, Testa declined to predict the campaign’s strategy. Based on the president’s previous statements, however, she said Lula would likely argue that the investigation should be allowed to run its course before responsibility is assigned. “He is very likely to say he will wait for the outcome to determine whether anyone should be held responsible,” she said.
Testa also sees little chance that the campaign will turn the case into an in-depth debate about institutional changes to the judiciary or the Supreme Court. Although proposals along those lines may appear in campaign rhetoric, she believes electoral dynamics are more likely to encourage the personalization of the conflict.
“The campaign is very short and needs very precise messages. I think it is more likely there will be a calculation around personalization because that generates more attention and tends to produce a greater electoral payoff.”
Christopher Garman, managing director for the Americas at Eurasia, said the episode is more damaging to Lula because it overshadows issues the government had hoped to highlight positively at this stage of the campaign. The damage may be softened, however, by a widespread perception that corruption is associated with both the Workers’ Party and Liberal Party candidates.
“Voters do not see either of them as credible on corruption. The case [involving Moraes and Vorcaro] does not directly affect President Lula. Still, it is bad for him because it brings a more negative agenda and heavy news coverage at a time when the Workers’ Party campaign wants to highlight measures it says have improved people’s lives. Since neither Flávio nor Lula has credibility on corruption, that softens the direct impact [on Lula], but negative news is bad for the incumbent,” he said.
According to Garman, the scandal hit just as the government was trying to highlight its accomplishments, including the vote on a proposal to end the six-day workweek with one day off. “Voters are pessimistic about the future. And you don’t want pessimistic voters when you are seeking reelection [as Lula is]. But I don’t see this as a factor that changes the probabilities in this election.”
The allegations also competed for attention with the revelation that Vorcaro transferred more money than Flávio had previously acknowledged toward “Dark Horse,” a biographical film about Jair Bolsonaro. Garman said “it is not easy for Flávio” to distance himself from that episode. At the same time, the Eurasia analyst sees broader institutional consequences. “The scandal deepens the crisis at the Supreme Court and puts enormous pressure on Moraes.”
Carlos Melo, a political scientist and professor at Insper, urged caution in assessing the electoral impact, saying “today’s scandal is forgotten when tomorrow’s scandal arrives.” In his view, the economy and public security are the issues that most concern voters, meaning other matters may carry only marginal weight.
Independent voters are unlikely to be mobilized by Tuesday’s revelations, Melo said, because there is already fatigue with successive waves of allegations affecting both sides. “Voters inside each political bubble defend their own side at any cost and attack the other. Independent voters, meanwhile, are starting to look at all of this with a certain disdain. Bombs keep being thrown from one side’s backyard into the other’s, and one ends up canceling out the effect of the other.”
*By Cristiane Agostine , Joelmir Tavares and Guilherme Carvalho , Valor — São Paulo
Current IPI is expected to be restricted to the Manaus Tax Free Zone and apply to just 5% of industrial goods
Tax lawyer Luiz Gustavo Bichara believes the government, “for political reasons and due to disorganization,” has not yet submitted the bill establishing the Selective Tax rates — Photo: Rogerio Vieira/Valor
The Lula administration’s economic team is considering publishing the list of products that will be exempt from the Industrialized Products Tax (IPI) on the same day it sends the provisional presidential decree (MP) on the Selective Tax (IS) to Congress. The IPI will be replaced by the Selective Tax in 2027. The tax will not disappear entirely, however, because it will still be levied on a small list of items to preserve the competitiveness of the Manaus Tax Free Zone (ZFM).
The two measures are eagerly awaited by companies because they can clarify exactly how these taxes will work next year. The consumption tax reform provides for the IPI rate to be reduced to zero starting in 2027 for all products except those produced in the ZFM. The IPI is expected to apply to only 5% of industrial products in the country, with the rate set at zero for the rest.
Supplementary Law 214, which regulates the consumption tax reform, requires the Executive branch to publish a detailed list of products that will have a zero IPI rate starting in 2027. The Federal Revenue Service has promised the publication since the end of May, but its release was delayed by the preparation of the Annual Budget Bill (PLOA) and uncertainties surrounding the Selective Tax.
The strategy now is to publish the list alongside the Selective Tax MP this month, in September. The goal is to link a measure considered negative by one faction of the government—taxing goods and services harmful to health or the environment through the Selective Tax—with a positive one: reducing the IPI rate to zero for about 95% of industrial goods produced in the country.
The decision has not yet been finalized, however. Part of the government’s political wing continues to argue that the Selective Tax MP should be postponed until after the elections, fearing its electoral impact, even though the tax would not represent an increase in the tax burden on the affected sectors. In that case, the IPI details could be released first and the Selective Tax later.
Changes to state and municipal transfers
On Monday (31), Finance Minister Dario Durigan reiterated that the rates proposed for the Selective Tax will take into account the same tax burden that the sectors affected by the new tax currently pay in IPI. “The Selective Tax projection takes into account the IPI burden that exists today, as I am negotiating with the sectors, maintaining the commitment not to increase the tax burden,” the minister said.
In the 2027 budget proposal, the government estimated that IPI revenue will amount to just R$5.497 billion, since the tax will be levied only residually to preserve the competitiveness of the ZFM, which generates tax credits. By comparison, the government expects to collect R$99.99 billion from the IPI this year, according to the latest bimonthly report on the assessment of revenues and expenditures in the 2026 budget.
The remainder of today’s IPI revenue was allocated for 2027 between the Selective Tax and the Contribution on Goods and Services (CBS), which will also replace the Social Integration Program/Contribution for Social Security Financing (PIS/Cofins) and the Tax on Financial Operations (IOF)-Insurance. The government estimates it will collect R$636.8 billion from the CBS in 2027 and R$42 billion from the Selective Tax. The figures may change depending on the rates ultimately set for the new taxes.
Revenue from the Selective Tax is much lower because, per the consumption tax reform, it applies only to products and services harmful to health and the environment, rather than to all products currently subject to the IPI.
Tax lawyer Luiz Gustavo Bichara, founding partner of Bichara Advogados, believes the government, “for political reasons and due to disorganization,” has not yet submitted the bill establishing the Selective Tax rates. “And now it will distort the purpose of the decrees, which should be issued in situations of urgency,” he said.
In his view, the delay in setting the rates creates legal uncertainty and makes it harder for companies to plan for next year. It also hampers efforts to attract potential new foreign investors. “How can someone establish themselves in a new country without knowing how much tax they will pay?” Bichara asks.
On the spending side, the near-elimination of the IPI will require the federal government to spend R$33.8 billion in 2027 to compensate states and municipalities for the end of the tax. The amount was also included in the 2027 budget proposal—equivalent to 0.2% of GDP.
The compensation will be necessary because the government shares part of IPI revenue with states and municipalities. In 2027, however, total IPI revenue will be replaced by the Selective Tax and the CBS, and only Selective Tax revenue will be shared with subnational governments, while CBS revenue will remain entirely with the federal government.
Because of that, the tax reform provides for compensation through a constitutionally mandated transfer to states and municipalities. To arrive at the R$33.8 billion figure, the government calculated the difference between what is currently transferred to states and municipalities through the IPI and what will be transferred through the Selective Tax. That difference became the budgetary compensation subnational governments will receive in 2027.
A government official told Valor that if the Selective Tax is significantly weakened during its consideration by Congress, compensation to states and municipalities will have to increase. Likewise, if the Selective Tax is strengthened, the amount will be reduced.
The R$33.8 billion transfer was classified in next year’s budget as a primary expenditure, meaning it is included in the calculation of the primary balance for purposes of meeting the fiscal target. At the same time, it was excluded from the year’s spending limit and classified as expenditure not subject to the cap.
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