Since September 20, 2021, Brazil has increased its tax burden on loan operations carried out by companies and also, consequently, on its investment financing plans, working capital financing and financing through prepayment of receivables, as well as on personal credit contracted for acquisition of durable and consumer goods.
The Brazilian tax on financial transactions (“Imposto sobre Operações Financeiras – IOF”) is a Federal tax levied on credit transactions (financial transactions), foreign exchange, insurance and investment securities operations, being withheld and collected by banks, foreign exchange brokers, insurance companies and financial institutions, as well as on general credit concessions.
Therefore, the IOF impacts, for example, as a rule, all transactions involving the exchange of financial assets, such as, among others, purchases abroad with credit cards, prepaid cards, purchase and sale of foreign currencies (exchange) taking out insurance policies and redeeming securities.
For purchases made abroad (even through the Internet) with international credit cards and prepaid cards, in foreign currency, the IOF was and remains high, that is, 6.38% of the value of purchases.
The IOF due on loans and financing contracted by companies, which was 0.0082% per day, therefore equivalent to an annual rate (365 days) of 3.0%, added to the rate of 0.38% on the total amount of credit, was increased to 0.01118% per day (4.08% per year), plus the same rate of 0.38% of the total credit amount.
For credit operations carried out by individuals, the daily rate increased from 0.041% (1.5% per year) to 0.00559% (2.04% per year), plus the same 0.38%.
It should also be noted that the IOF is also, as a rule, levied on foreign exchange transactions, that is, the purchase or sale of Euro, Dollar and other foreign currencies, for the settlement of international transactions, external financing, international purchases with credit cards, remittances of funds from Brazil abroad and from abroad to Brazil (including transfers among bank accounts of the same ownership), among others.
Although, in this kind of financial transactions (foreign exchange transactions), the maximum rate charged may be up to 25%, in practice, it varies from case to case. Since the sending of funds from abroad to Brazil, for example, is subject to the 0.38% IOF rate, including transfers between bank accounts of the same ownership. In the case of sending funds from Brazil abroad between accounts with the same ownership, the applicable rate is 1.1% or 0.38% between accounts with different ownership.
Thus, on the purchase of Euro, Dollar and other foreign currencies from banks and exchange brokers, the IOF rate corresponds, therefore, to 1.1%.
Finally, it is worth noting that, besides the recent increase in the tax burden, analysts' estimate predicts that the basic interest rate of the Brazilian economy (“Taxa SELIC”) set periodically by the Central Bank of Brazil, which, at the beginning of this year of 2021 was at 2% and, in August, reached 5.25%, it should reach the end of the year, according to market analysts, at 7.25%.
