IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
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Inception date: 21 Jan 2015 | Removal date: open ended

Control on personal transactions

On January 20, 2015, the Congress of Brazil passed Decree 8,392 increasing the IOF levied on credit transactions (loans and factoring) carried out by individuals from 1.5% to 3% per year.

IOF TAX
The IOF is a tax levied on any lending/borrowing transaction; or any conversion of foreign currency into Brazilian Reais (BRL), or vice-versa; and on any issuance, purchase, sale, redemption or liquidation of securities, including quotas of funds or bonds.

In the cases of loans, even though the borrower is the taxpayer, the creditor is responsible for calculating, withholding and collecting this tax.

As to foreign currency conversions, and more specifically in the case of a borrowing/lending transactions, the IOF is levied on inflows and outflows of funds corresponding to loans obtained from, or granted to, foreign entities or persons.

This tax emerged to control foreign capital inflows/outflows since the appreciation of the Brazilian real was hurting the manufacturing sector in the country.

For more information on the evolution of this tax, please see related state acts.

AFFECTED COUNTRIES

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