IOF/FX - Rate Reduction
On June 05, 2013, Decree No. 8,023 ("Decree
8,023/2013") was published on the Official Gazette,
introducing relevant changes on the Tax on Financial Transactions
Regulations ("RIOF"), approved by Decree No. 6,306, dated
December 14, 2007.
The measure, which was announced last night by the Ministry of
Finance Guido Mantega, aims to boost the inflow of funds in Brazil
and minimize the devaluation of the Brazilian Real in relation to
the American Dollar and, consequently, the inflationary
pressure.
Items XI and XII of article 15-A of the RIOF were amended so as to
reduce from 6% to zero percent the rate of the tax levied upon
foreign exchange transactions ("IOF/FX") carried
out in connection with the inflow of funds of foreign investors for
purposes of investments in the Brazilian financial and capital
markets.
Prior to the new rule, only the inflows related to transactions
carried out on the stock exchange, IPOs, investment in private
equity funds, and investments related to bonds and securities
issued to fund investment projects were subject to such zero
percent rate. As of today, these exceptions have become the rule,
so that the inflow of funds related to any foreign investment in
the Brazilian financial and capital markets will benefit from the
mentioned zero percent rate.
Note that the 6% rate remains in force for the liquidation of
exchange transactions related to the inflow of funds in connection
to foreign loans subject to registration before the Brazilian
Central Bank ("BACEN"), with minimum average term shorter
than 360 days.
The Decree 8,023/2013 shall enter into force on the date of its
publication, i.e. June 05, 2013. However, the Decree does not
clarify the tax treatment applicable to foreign exchange
transactions entered into before this date and liquidated as from
today.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
