ANNOUNCEMENT 01 Apr 2013

In April 2013, the government of Brazil announced altered domestic business conditions for foreign investors.

NUMBER OF INTERVENTIONS

1

  • 0 harmful
  • 0 neutral
  • 1 liberalising
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 SECTORS

 
N/A

AFFECTED PRODUCTS

 
N/A