Article by Christiano Chagas , André Novaski , Roberta P. Caneca and Roberto Casarini

Originally published October 6, 2010

Keywords: Brazil, IOF rate, foreign exchange transactions, investment funds, private equity funds, FIPs

Decree No. 7.323, published on October 5, 2010, increases the tax levied on the foreign exchange transactions (IOF ) related to the inflow of funds for investment in the Brazilian financial market.

As a result, the IOF rate on the inflow of funds for investment in fixed income transactions as well as Investment Funds, including Private Equity Funds (FIPs), has been increased from 2 percent on the total amount invested to 4 percent. The IOF on foreign investments in the Brazilian capital markets (i.e., investment in assets traded on the stock exchange) remains unchanged at 2 percent rate.

Finally, the IOF on the outflow of funds related to foreign investment in both the financial and capital markets remains unchanged at zero percent rate.

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