Keywords: Federal Decree 8.392, IOF-Credits,

Federal Decree 8.392 was enacted on January, 21, 2015, producing legal effects as from January, 22, 2015. Pursuant to Decree 8.392/15, the Brazilian Federal Government increases the rate of the Tax on Financial Transactions ("IOF-Credits") from 0.0041% per day (limited up to 1.5% per year) to 0.0082% per day (limited up to 3% per year). The IOF-Credits tax applies to funds lent by legal entities to individuals, in the following transactions: (i) loans with predetermined and variable borrowed amounts; (ii) discounting of receivables; (iii) advance payment to the depositor; (iv)loan and financing where funds are borrowed in installments; (v) exceeding credit limits; and (vii) non-residential real estate financing.

It is worth mentioning that the abovementioned increase in the tax rate applicable to IOF-Credits is one of several economic measures, which have been recently announced by the Brazilian Finance Ministry, with the purpose of slowing down consumption and maintaining inflation under control.

Originally published January 26, 2015

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