Invest, business owner. The tax is now zero.
Finance Minister Guido Mantega has just opened another front for tax relief in the economy; after stimulating consumption with measures such as reducing the IPI (tax on industrialized products) on vehicles, the government has just eliminated the IOF (tax on financial transactions) on financing for the purchase of machinery, equipment, and products aimed at infrastructure projects; Dilma and Mantega's goal is to guarantee growth of at least 3% in 2013.
Luciene Cruz
Reporter from Agência Brasil
Brasilia – The government has reduced the Financial Operations Tax (IOF) rate to zero for financing capital goods, consumer goods for export, the electricity sector, engineering projects, technological innovation, and logistics infrastructure projects such as highway and railway works, which are part of federal government concessions.
According to Finance Minister Guido Mantega, the measure aims to make bank loans more competitive. "The removal of the IOF tax was intended to make bank loans for capital goods for investment more competitive, especially those with mandatory reserve requirements. We released the reserve requirement for banks for this purpose," he said.
According to the head of the department, with the removal of the tax, banks will be able to lower the cost of loans for long-term investments. This will mainly benefit financing for sectors involved in infrastructure. The incentive was created by Decree 7.975, published today (2) in the Official Gazette of the Union. According to the text, the measure is valid for credit operations contracted from today. The rule amends Decree 6.306, which regulates the IOF.
Credit operations had reduced interest rates because they were included in the Investment Support Program (PSI). Under this program, interest rates are 3% per year until June of this year. From the second half of the year, the rate will increase to 3,5%. The financing term for the program is 20 years, with a grace period of up to 36 months.