Brazil unveils plan to cut taxes on forex transactions by 2029

[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 (S$2.03 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 per cent to 0 per cent 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 per cent 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 per cent from 1.10 per cent.

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. REUTERS