The decree increases the financial transactions tax on domestic loans.

On September 16, 2021, the Brazilian government published Decree 10,797/21, increasing the financial transactions tax (Imposto sobre Operações de Crédito, Câmbio e Seguro, ou relativas a Títulos ou Valores Mobiliários or IOF) on domestic loans from September 20, 2021 to December 31, 2021.

The new IOF credit rates for entities apply to domestic loans with pre-determined principal amounts at a maximum rate of 2.42% per year (0.38% upon grant, plus 0.00559% per day on the principal, limited to 2.04%, bringing the total to 2.42%).

The daily rate for individual borrowers is 0.01118%. The maximum rate is 4.46% (0.38% upon grant, plus 0.01118% per day on the principal, limited to 4.08%, bringing the total to 4.46%).

For loans with non-pre-determined principal amounts, the IOF credit rate of 0.38% is due upon the granting of the loan, and the daily rate (0.00559% for entities or 0.01118% for individuals) is collected at the end of each month based on the outstanding balance of that month (including interest).

The changes introduced by Decree 10,797 are effective September 17, 2021.

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