March 17, 2022
Brazil reduces financial transaction tax on foreign exchange settlements
The decree reduces the foreign transaction tax from 6.38% to 0% by 2029 for certain settlements of foreign exchange currency. The gradual reduction in the foreign transaction tax represents a step towards Brazil becoming a member of the OECD countries.
On March 16, 2022, Brazil's Executive Branch published Presidential Decree 10.997/2022, reducing the Brazilian financial transaction tax (IOF-FX) due on the settlement of foreign exchange currency (FX). This change is part of Brazil's efforts to join the OECD.
Currently, the IOF-FX is levied at rates ranging from 0% to 6.38% on the gross amount of foreign currency transferred to or from Brazil, depending on the nature of the FX transaction (certain transactions are exempt from IOF-FX).
Decree 10.997 will gradually reduce the IOF-FX rates on all eligible FX settlements to 0% by 2029, as follows: