Another IOF Change Affects Foreign Currency Loans In Brazil

For the second time this year, by means of Decree No. 7698, of March 9, 2012 (Decree 7698/2012), published in the Official Gazette of the Union of March 12, 2012, the Brazilian Federal Government decided to increase from three to five years the term of the foreign currency loans which are subject to the tax on exchange transactions (IOF) at the rate of 6%. As in the previous IOF increases, this measure comprises all form of loans which are subject to registration with the Central Bank of Brazil (Banco Central do Brasil - Bacen)¹. On March 1^st, 2012, Decree No. 7683, of February 29, 2012 (Decree 7683/2012) increased from two to three years the average minimum maturity term of the foreign currency loans subject to IOF.