The Brazilian government issued a decree to bring IOF (the tax on financial operations) to zero by 2029, the Ministry of Economy reported on Tuesday.
According to a note from the ministry, the reduction will be gradual and staggered, with an annual impact reaching BRL 7.7 billion when the measure is fully implemented, starting in 2029.
The signing of the decree with the new rules by President Jair Bolsonaro took place at an event at Palácio do Planalto this Tuesday afternoon, along with the announcements of a new securitization framework and changes in rules on rural guarantees.
“The goal is to align Brazil with the provisions of the Capital Liberalization Code of the Organization for Economic Cooperation and Development (OECD), to which we are in the process of joining,” the Ministry of Economy said in a statement.
According to the ministry, there will be an immediate reduction from 6% to 0% in the IOF rate that is levied on loans of up to 180 days carried out abroad.
Between 2023 and 2028, there will be a staggering reduction of the IOF on the use of credit cards abroad. The current charge of 6.38% will drop one percentage point a year until it reaches zero in 2028.
Also in 2028, the rate on the acquisition of foreign currency in cash will be reduced from 1.10% to 0%. All other operations, with a rate of 0.38%, will change to 0% in 2029.
The cost of the measure to the federal government’s coffers will start at BRL 500 million in 2023, increasing in stages until reaching BRL 7.7 billion in 2029.
Translated by LABS