• Service: Tax, Global Transfer Pricing Services, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 7/1/2014

Brazil - Financial transactions tax (IOF) on cross-border loans 

July 1:  The Brazilian government issued Decree no. 8,263/14 (4 June 2014) that modifies the average maturity term for cross-border loans and provides a new average maturity term for purposes of the tax on financial transactions (IOF) to be assigned a zero (0%) rate.

Under former provisions, a 6% rate of IOF was triggered on the conversion of foreign currency into Reais at the time of the inflow of funds into Brazil, when the average maturity term of the loan was less than 360 days.

With the new measures, there is a new average maturity term of 180 days.

Read a release containing a hyperlink to text of Decree no. 8,263 (Portuguese).

KPMG observation

Companies with investments in Brazil could be affected by the new IOF rules and, in particular, their current tax structures may be affected if cross-border debt is involved. The IOF is an ever-changing field, and these changes can affect cross-border funding options within Brazil. Affected entities will want to identify and consider potential tax effects and potential tax opportunities.

For more information, contact a tax professional with KPMG’s Americas Center:

Devon Bodoh

(202) 533 5681

Alfonso A-Pallete

(305) 913 2789

Murilo Mello

(305) 913 2781

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