Brazil Banks Assess Impact of Potential End to LCI/LCA Tax Exemption

Brazilian banks are evaluating the potential removal of income tax exemptions on real estate (LCI) and agribusiness (LCA) letters of credit, a move under government review that could also restrict collateral for CRI/CRA certificates. The change would raise funding costs and tighten credit conditions, with implementation expected around 2027. The policy shift signals a broader fiscal consolidation effort, but its timing and scope remain uncertain.