ANNOUNCEMENT 20 Jan 2015
The Brazilian Government increased the IOF levied on credit transactions (loans and factoring) carried out by individuals.
NUMBER OF INTERVENTIONS
Presidency of the Brazilian Republic. Presidencia de la República. Decreto No. 8392 de 20 de Janeiro de 2015. Available at: http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2015/decreto/D8392.htm
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.
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.