Foreign investment and profit remittances taxes by new financial transactions tax

Decrees 6,306/2007 and 6,339/2008 have increased the financial transactions tax (IOF) applicable to certain currency exchange, insurance, loan, and financing transactions. The rate increase is an attempt by the government to compensate, at least partially, for the loss of the 0.38 percent bank transactions tax (CPMF), which expired on December 31, 2007, after the Senate rejected its extension to December 31, 2010. Direct foreign investments into the country and remittances of profits outside Brazil are among the items subject to the new 0.38 percent IOF