On March 15th, 2022, the federal executive branch issued Decree 10,997/2022, amending Decree 6,306/2007, which regulates Tax on Financial Transactions (“IOF”). Pursuant to Decree 10,997/2022, IOF rates, applicable to foreign exchange transactions, will be gradually reduced to zero.

Among the modifications introduced by Decree 10,997/2022, one of the most relevant refers to the inflow of funds into Brazil, deriving from foreign loans, which will, as of March 16, be subject to IOF at 0% rate, regardless of the average term of the loan.

The changes introduced by Decree 10,997/2022 are part of the procedures Brazil will have to adopt in its request to join the Organization for Economic Co-operation and Development (“OECD”). Earlier in 2022, the OECD Council decided to open accession discussions with Brazil. The reduction in IOF charges is one of the measures that the Brazilian government will have to adopt within the process of joining OECD. Hence, other changes in this regard are expected to follow.

Please find below a comparative chart, summarizing the gradual IOF/ Exchange rates reduction:

IOF Rates
Transaction Current Rate Decree 10,997/2022
Foreign Loans - Inflow of Funds (Average term lower than 180 days) 6%

0%
Effective as of March 16, 2022

Transactions with credit and debit cards abroad

Cash withdrawal abroad

Travel checks and prepaid cards
6.38%

5.38%
Effective as of January 2nd, 2023

4.38%
Effective as of January 2nd, 2024

3.38%
Effective as of January 2nd, 2025

2.38%
Effective as of January 2nd, 2026

1.38%
Effective as of January 2nd, 2027

0%
Effective as of January 2nd, 2028

Acquisition of foreign currency in kind 1.10%

0%
Effective as of January 2nd, 2028

International transfer of funds 1.10%

0%
Effective as of January 2nd, 2028

General foreign exchange transactions   0.38%

0%
Effective as of January 2nd, 2029

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