Brazil will eliminate taxes on foreign currency purchases

RIO DE JANEIRO, BRAZIL – Brazilian President Jair Bolsonaro signed on Tuesday a decree to gradually eliminate, in a process that will be extended until 2028, the tax on exchange operations, which will make it cheaper to acquire foreign currency in the country, the government said in a statement.

“This measure will facilitate the opening of the financial market to international trade, expand the attraction of international investors and make it easier for Brazilian companies and investors to do business abroad, adapting the legislation to the levels of large economies in the world,” says a statement from the Brazilian Presidency.

The decree reduces the Tax on Financial Operations (IOF) to zero, which currently stands at 6.38% of currency exchange operations.

The measure is part of the requirements requested to Brazil to join the Organization for Economic Cooperation and Development (OECD).

“The objective is to align Brazil to the provisions of the OECD’s Capital Liberalization Code, to which we are in the process of adhering,” says the statement released by the Planalto Palace, the Brazilian government headquarters.

With the measure, says the official note, it will be cheaper for Brazilians to buy foreign currency and make purchases abroad.

The OECD gathers 38 countries, is headquartered in Paris, and the accession is seen by Brazil, the major Latin American economy, as a seal of guarantee to attract investments.