Brazil has increased the Imposto sobre Operações Financeiras (IOF) tax, impacting credit operations, currency exchange, and VGBL insurance contributions. The new decree, effective immediately, aims to boost government revenue by an estimated R$ 18 billion in 2025.
The IOF rate is now a unified 3.5% for all foreign remittances and payments, including international website purchases and cloud services. Previously, rates varied between 0.38% and 4.38% with a gradual reduction planned until 2028, a trend now reversed.
This change significantly affects businesses, particularly those using international services like cloud computing and freight. The tax on international freight, for example, has risen from 0.38% to 3.5%, potentially increasing the cost of imported goods. Even domestic purchases made with credit cards will be affected, increasing costs for consumers.
Companies will also face higher IOF rates on loans, with the total rate increasing from 1.88% to 3.95% annually. For companies under the Simples Nacional, the rate will rise from 0.88% to 1.95%. Monthly contributions over R$ 50,000 to VGBL plans will now be taxed at 5% on the total monthly contribution.