BRASILIA – Brazil’s government published a decree on Tuesday to phase out taxes on financial operations using foreign exchange, known as IOF taxes, as part of an effort to join the Organization for Economic Co-operation and Development (OECD).
The reduction will be gradual, with its annual impact reaching 7.7 billion reais ($1.49 billion) when the measure is fully implemented in 2029, the country’s Economy Ministry said in a note.
There will be an immediate reduction from 6% to 0% in the tax rate on loans of up to 180 days abroad.
Between 2023 and 2028, there will be a reduction in the IOF tax on the use of credit cards abroad. The current rate of 6.38% will fall by one percentage point per year until it reaches zero in 2028.
Also in 2028 the rate on the purchase of foreign currency in cash will be reduced to 0% from 1.10%.
In January, Brazil declared its intention on cutting taxes on foreign exchange transactions shortly after the OECD started talks to allow Brazil to join organization.
($1 = 5.1631 reais)
(Reporting by Bernardo Caram; Writing by Peter Frontini)