In brief

The Brazilian Federal Government has once more reduced to zero the tax rate of the Tax on Financial Transactions (IOF) levied on credit operations contracted between 15 and 31 December 2020.


On 11 December 2020, the Brazilian Government published Decree No. 10,572, which amended Decree No. 6,306 / 07 and reinstated the IOF tax rate on credit operations to zero.

The benefit had been established for credit operations contracted between 3 April 2020 and 26 November 2020, with the previous rate taking effect after that period. However, the new Decree published last Friday reduced that rate again to zero, covering operations contracted between 15 and 31 December 2020.

The IOF is generally levied on credit transactions by applying a daily rate (defined according to the nature of the borrower – legal entity or individual), limited in some modalities, plus an additional rate of 0.38%. These two rates were temporarily zeroed by Decree No. 10,572/2020.

This measure includes all types of loans, including financing transactions, discount operations, including those arising from the sale of credit rights to factoring companies resulting from installment sales, advances to depositors, among others.

We are available to discuss how these changes can benefit your company, including in relation to certain types of credit transactions executed before Decree No. 10,572/2020 entered into force.

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