In September 2012, the government of Brazil announced changed incentives for foreign investors entering the country.



  • 0 harmful
  • 0 neutral
  • 1 liberalising


Lexology. (2014). Brazil has some big projects to fund - capital markets exempted bonds. Available at

Brazilian Government. (2012). Law No. 12.715 from 17 September 2012. Available at

Inception date: 18 Sep 2012 | Removal date: 18 Dec 2015

FDI: Financial incentive

On 17 September 2012, the Brazilian government issued Law No. 12.715/2012 (in force as of 18 September 2012), introducing tax exemptions for foreign investors in order to finance investment projects, infrastructure, complex economic production, research, development and innovation.

The main purpose of this new Legislation is to help finance the infrastructure projects necessary for the 2014 World Cup and the 2016 Olympic Games in Brazil. Apart from this, the Brazilian government hopes to boost the development of its secondary bond market. Therefore, the new tax benefit is not limited to the financing of infrastructure projects for the two sporting events. It also introduced modifications to the funding mechanisms in the Brazilian capital and financial markets, particularly relating certain tax aspects of funding instruments.

With the introduction of this new legislation, the withholding tax due on income generated by bonds and securities for public distribution, issued by legal entities not classified as financial institutions and regulated by the Brazilian Securities Exchange Commission (Comissăo de Valores Mobiliários (CVM)) or the Brazilian Monetary Council (Conselho Monetário Nacional (CMN)), was reduced to zero.

The tax benefit covers bonds and securities acquired between 1 January 2011 and 31 December 2015. All income must be paid to a beneficiary resident or domiciled abroad, but foreigners living in favoured tax countries or dependencies are excluded. With the introduction of this law, the same tax treatments apply for foreign investors and Brazilian residents.
Requirements to profit form the withholding tax exemption:
The bonds must pay a fixed interest rate based on an index-linked price or reference rate. Total or partial post fixed interest rates are prohibited. Furthermore, bonds falling under the scheme must comply with the following cumulative requirements:
1) An average maturity of more than four years.
2) A prohibition on the repurchasing of the bonds by the issuer or any related party and the assignor or originator in the first two years after their issuance and early settlement by means of redemption or prepayment, except if otherwise regulated by the CMN.
3) No commitment on resale assumed by the buyer.
4) Interest payment, if any, with a frequency of at least 180 days.
5) Evidence that the bonds have been registered in a clearing system duly authorised by the Central Bank of Brazil or the CVM.
6) A simplified procedure (determined by the CMN) that evidences the purpose of allocating the proceeds to the future payment of or to the reimbursement of costs, expenses or debts related to investment projects, including those focussing on research, development, and innovation
Furthermore, the law altered the rules for bonds issued by any Brazilian Special Purpose Vehicle (SPV) incorporated as a Brazilian corporation (sociedade anônima), including those licenced or authorised to render public services or its controlling companies (provided they are also incorporated as a Brazilian corporation (sociedade anônima)), to raise funds to invest in either infrastructure projects or intensive economic production projects focused on research, development, and innovation in places considered to be priority areas by the Brazilian Federal Government (SPV Bonds). The income of such bonds will be subject to taxes at the following rates:
1) Zero, when the income is paid to an individual or a foreign investor, provided that such investor is not domiciled in a favoured tax country or dependency.
2) 15% when the income is paid to a Brazilian legal entity.
Foreign investors, not domiciled in a favoured tax country or dependency, will also benefit from the SPV Bonds zero rate tax.
The same rates described above will also be applicable for investments made in Brazilian investment funds with portfolios composed of at least 85% of SPV Bonds or companies controlling the SPV.