Government creates decree to zero IOF on the card by 2028; see calendar – Tecnoblog

President Jair Bolsonaro sanctioned on Tuesday (16) a decree that regulates the gradual reduction of the IOF (Credit, Exchange or Insurance Operations Tax, related to Securities). The government plans to completely zero the tax rate, which is levied on credit card purchases abroad, by 2028.

IOF on credit card purchases made abroad will be zero by 2028 (Image: Pickawood/Unsplash)

The approved decree was published in the edition of the Official Gazette on the morning of this Wednesday (16). With the measure, the government seeks to adapt Brazilian legislation on foreign exchange operations to the rules of the OECD (Organization for Economic Cooperation and Development). Since January 25, the board of the international entity began to discuss Brazil’s entry into the bloc.

The Ministry of Economy informs that, in addition to preparing the country for joining the OECD, the decree that changes the IOF rules will “promote greater economic integration of Brazil to the international community”. It is a measure that has been tested by the government since January.

For the agency, the gradual reduction of the tax will mean greater opening of Brazil to international trade, increase the number of international investors that invest money in the country and facilitate investments abroad made by Brazilian companies or businessmen. This is because Brazilian legislation will adopt a standard already used “by the largest economies in the world”.

Check out how the gradual reduction of the IOF in Brazil will be

The IOF is applied to four types of operation in Brazil:

  • 6% rate on operations involving receipt or remittance of foreign funds for up to 180 days;
  • Fee of 6.38% on international purchases and transactions abroad with credit, debit and prepaid cards;
  • 1.1% fee on purchases of foreign currency or operations for bank accounts abroad;
  • And a rate of 0.38% on “other foreign exchange transactions”;

The government wants to bring the rates of all applications to zero by 2028. Even as of Friday, all short-term loans made abroad – up to 180 days – will already have a 0% IOF rate.

For the Brazilian consumer, however, the modality of purchases of imported goods or services with a credit, debit or multiple function card will gradually decrease until 2028. The following table explains better how this reduction will be:

IOF tax rate Date of reduction
From 6.38% to 5.38% As of January 2, 2023
From 5.38% to 4.38% As of January 2, 2024
From 4.38% to 3.38% As of January 2, 2025
From 3.38% to 2.38% from January 2, 2026
From 2.38% to 1.38% from January 2, 2027
From 1.38% to 0% from January 2, 2028

The decrease is valid for international transactions, withdrawals abroad and purchase of foreign currency by check to load a prepaid international card — used mainly for travel.

In the case of purchases of foreign currency in cash, the IOF tax will drop from 1.1% to 0% only in 2028. For “other foreign exchange transactions”, whose current rate is 0.38%, the rate will be reduced to zero in 2029.

In the first three years in which the IOF reduction measure will come into force, the Ministry of Economy expects a tax waiver of more than R$ 2.7 billion. As it is a gradual reduction, this value is expected to reach R$ 7.7 billion by 2029, when all rates will be zeroed.

heard by g1the secretary of Economic Policy of the agency Pedro Calhman says that the government can go back and charge the IOF to mitigate financial instabilities:

“Brazil remains entitled to use this instrument for financial stability purposes, so if there is a situation in which Brazil sees the need to insert IOF on foreign exchange transactions due to financial needs, it has the option to do so within OECD rules. .”

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