Brazil: Rate changes regarding tax on financial transactions (IOF)
Changes part of the process of Brazil's accession to the capital liberalization regime of the OECD
Rate changes
The rates of the tax on financial transactions (Imposto Sobre Operações Financeiras—IOF) are scheduled to be reduced as follows:
- A gradual reduction of the IOF rate, eventually to 0% as of 2 January 2028, regarding credit card transactions made abroad and the acquisition of foreign currency in traveler's checks or prepaid cards
- A reduction of the IOF rate to 0% as of 2 January 2029, with regard to the settlement of foreign exchange transactions for (1) acquisitions of foreign currency, and (2) transfers of funds abroad
- A reduction of the IOF rate to 0% as of 2 January 2029, as the general rate for foreign exchange transactions
These changes are part of the process of Brazil's accession to the capital liberalization regime of the Organisation for Economic Cooperation and Development (OECD).
Background
The IOF is a federal tax levied on credit, exchange, insurance, and securities transactions executed through financial institutions—including intercompany loans. The tax also applies to gold transactions. The rates of the IOF can be increased / reduced by Brazil’s federal government by decree, often with such changes being effective immediately.
Read a March 2022 report (Portuguese) prepared by the KPMG member firm in Brazil
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