IMPLEMENTATION LEVEL

NFI

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 02 Apr 2013 | Removal date: open ended
Still in force

FDI: Treatment and operations, nes

On 1 April 2013, the government adopted Decree 7.975 reducing the Tax on Financial Operations (IOF) on local financing projects to 0%. According to KPMG, the measure affects the following types of investments:
 

  • acquisition, production and leasing of capital goods and associated working capital;
  • production of consumable assets for export purposes;
  • (electricity) power sector;
  • export structures of liquid bulks;
  • engineering projects;
  • R&D projects;
  • investment projects associated with the creation of productive and technological capacity in sectors with high knowledge and engineering intensity; and
  • logistic infrastructure projects meant to be used for the construction of roads and railways, subject to concession by the Federal Government.

 
Before the enactment of the Decree, only the funding by the Brazilian Development Bank (BNDES) was exempted from the IOF tax. Private borrowers had to pay an IOF tax of 1.5% per annum, plus 0.38% at the time of the contracting of the loan (see Mondaq).
 
The measure took effect on 2 April 2013.

AFFECTED COUNTRIES

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