According to the Ministry of Economy, the reduction will be gradual and should start as early as 2022, initially with short-term entry and exit operations of foreign resources.
Brazil‘s Ministry of Economy reported this Friday that the government decided to zero the Tax on Financial Operations (IOF) on foreign currency operations until 2029 to accelerate the country’s accession to the Organization for Economic Cooperation and Development (OECD).
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According to the ministry, the reduction will be gradual and should start as early as 2022, initially with short-term entry and exit operations of foreign resources, of up to 180 days. The changes will be made by a presidential decree.
In a note, the ministry said that the tax cut will cover four groups of incidence of the IOF exchange rate, with gradual reductions for each group.
The first group will involve short-term operations. The second will cover transactions with credit or debit cards, travelers checks and international prepaid cards.
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The third, in turn, will encompass foreign exchange operations for the acquisition of foreign currency in cash in Brazil and the transfer of funds from residents in the country for availability abroad. The fourth group, finally, will involve the other exchange operations.
The ministry stressed that in the event of future crises, the OECD rules allow the adoption of prudential measures, provided they are not discriminatory or with excessive rates.
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“The change will improve the scenario for international transactions, payments for services and foreign trade and investment transactions, whether short or long term, by eliminating the tax obstacle that currently affects operations with foreign currency. discrimination among economic agents wishing to operate in the country,” the ministry said in a statement.
(Translated by LABS)