Brazil: Rate of tax, foreign exchange transfers | KPMG | GLOBAL

Brazil: Increased rate of tax, foreign exchange transfers

Brazil: Rate of tax, foreign exchange transfers

An increase to the rate of tax imposed on foreign exchange transactions is effective 3 March 2018. The new rate is 1.10% of the foreign exchange transaction with respect to remittances of funds by Brazilian residents to their foreign bank accounts.

1000

Related content

Background

In Brazil, a federal tax is levied on credit, exchange, insurance and securities transactions executed through financial institutions—and includes intercompany loans. The tax also applies to gold transactions.

The rates of the financial transaction tax (Imposto Sobre Operações Financeiras—IOF) can be increased / reduced by Brazil’s federal government by decree, with such changes being effective immediately. The tax base varies depending on the taxable event and the financial nature of the transaction.

Increased IOF rate

Decree 9,297 (published on the official gazette on 2 March 2018) makes a change to the IOF foreign exchange legislation (Decree 6,306/2007) in relation to cross-border remittances made to bank accounts held abroad by Brazilian residents.

As a result of the change, the rate of IOF is increased to 1.10%—up from 0.38%—on foreign exchange transactions for transfers of funds by Brazilian residents to their foreign bank accounts held abroad. The new rate applies beginning 3 March 2018. 

According to the Ministry of Finance, the purpose of the change was to eliminate tax distortions by applying the same IOF rate on foreign exchange transactions for both the remittance of funds to bank accounts abroad and the purchase of foreign currency by Brazilian residents. 

 

Read a March 2018 report (English) and (Portuguese) prepared by the KPMG member firm in Brazil

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us

 

Request for proposal

 

Submit