ANNOUNCEMENT 01 Apr 2013In April 2013, the government of Brazil announced altered domestic business conditions for foreign investors.
NUMBER OF INTERVENTIONS
Decreto 7.975 of 1 April 2013, published in Official Gazette of 2 April 2013 (in Portuguese): http://www.receita.fazenda.gov.br/Legislacao/Decretos/2013/dec7975.htm
KPMG, tax news, 3 April 2013: http://www.kpmg.com/br/en/estudos_analises/artigosepublicacoes/pages/taxnews-iof-infrastructure.aspx
Mondaq, 5 April 2013: http://www.mondaq.com/x/230484/Shareholders/New+Developments+On+Financing+Of+Infrastructure+Projects+In+Brazil
Valor Econ?mico, 2 April 2013 (in Portuguese): http://www.valor.com.br/brasil/3069608/governo-zera-iof-em-credito-para-maquinas-energia-e-tecnologia
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:
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.