Promised at the beginning of the year, the gradual reduction of the Tax on Financial Operations (IOF) on foreign exchange was made official today (15). President Jair Bolsonaro signed a decree with the staggered reduction of the tax, which will be reduced in stages until it reaches zero in 2028.
The signing took place at a ceremony at the Planalto Palace, with the presence of the Minister of Economy, Paulo Guedes. The extinction of the IOF on foreign exchange operations is one of the requirements for the country to join the Organization for Economic Cooperation and Development (OECD). The Federal Revenue estimates that the government will fail to collect R$ 7 billion a year with the measure.
The change is one of the obligations to be fulfilled by Brazil in order to adhere to the Codes of Liberalization of Capital Movement and Invisible Operations, an instrument required for the countries that integrate the OECD.
In January, the government had announced that it intended to start cutting the IOF exchange rate later this year. According to the Ministry of Economy, Brazil is in an advanced stage of convergence with the OECD, having adhered to 104 of the 251 normative instruments of the international body.
According to the Secretariat for International Affairs of the Ministry of Economy, the accession process is faster than in other countries invited to join the group or that act as key partners, such as Argentina (51 instruments), Romania (53), Peru (45), Bulgaria (32) and Croatia (28).
Founded in Paris in 1961, the OECD serves as a body that evaluates and recommends practices and policies that promote prosperity, equality, opportunity and global well-being. With 38 member countries, the organization accounts for 61% of the world’s Gross Domestic Product (GDP).
