IOF, Brazilian Tax For Purchases In Dollars With Credit Or Prepaid Card, Retreats To 3.38%; Measure Began In The Bolsonaro Government
The Financial Operations Tax (IOF) for purchases abroad with a credit card or international prepaid cards (loaded with dollars) was reduced from 4.38% in 2024 to 3.38% earlier this year. The change was already provided for in a calendar defined in 2022 by the Bolsonaro Government and was not changed during the administration of Luiz Inácio Lula da Silva, coming into force on Thursday
The taxation for the purchase of foreign currency in kind (cash), set at 1.1%, remains unchanged, with the rates for both modalities expected to fall to zero only in 2028.
When the measure was announced in 2022, the Ministry of Economy, under the command of Paulo Guedes, clarified that the objective was to align Brazil with the Capital Liberalization Code of the Organization for Economic Cooperation and Development (OECD), to which Brazil is in the formal process of accession. In January of that year, the OECD formally invited Brazil, along with five other countries, to start discussions about joining the entity.
The rate reduction schedule for the use of credit and prepaid cards abroad follows as planned:
- 2026: from 3.38% to 2.38%
- 2027: from 2.38% to 1.38%
- 2028: from 1.38% to zero
This movement of liberalization of the foreign exchange market in Brazil was consolidated with the approval of new rules that came into force in early 2023. The legislation, which facilitates the movement of capital and the performance of operations in the foreign exchange market in a less bureaucratic way, was a response of the Central Bank (BC) to the previous foreign exchange legislation, which, structured in 1920, no longer fit with the current globalized economy.
Source: Gazeta