14/10/2014 em Velloza Tax News

Decree No. 8,325/2014 Amendments to the IOF Regulation

October 14, 2014

On October 08, 2014, Decree No. 8,325, of October 07, 2014 (“Decree No. 8,325/2014”) was published on the Federal Official Gazette (“DOU”), (i) amending Articles 8 and 32 of Decree No. 6,306, of December 14, 2007 (“Decree No. 6,306/2007”), which regulates the Tax on Credit, Foreign Exchange (“FX”) and Insurance Transactions, and Transactions related to Bonds and Securities (“IOF Regulation”), as well as (ii) replacing Article 15-A with Article 15-B, in the following terms:

• “IOF/Credit” (Article 8 of the IOF Regulation)
• The IOF/Credit rate is reduced to zerofor credit transactions:

(a) carried out by financial agents of the Studies and Projects Financier (Financiadora de Estudos e Projetos – FINEP), with funds from said state-owned company; and

(b) carried out for the purpose of financing logistics infrastructure projects focused on highway and railway works subject to concessions by the Federal Government, in accordance with Article 6, paragraph 3, of Law No. 12,973, of April 02, 2013.

• “IOF/FX” (Current Article 15-B of the IOF Regulation)
• Revocation of Article 15-A and replacementthereof by Article 15-B, which has maintained most of the situations that were enlisted by the revoked article, at the exception of the following amendments:

(a) The 6.38% IOF/FX rate (six and thirty-eight hundredths per cent) has been extended to FX transactions carried out for the payment of obligations due by debit card companies in connection with the purchase of goods and services from abroad carried out by their clients.

(b) The IOF/FX rate is also reduced to zero in the case of FX transactions carried out for the payment of obligations contracted by debit card companies in connection with the purchase of goods and services from abroad where the user of the relevant debit card is either the Federal Government, States, Municipalities or the Federal District, as well as their foundations and independent agencies (autarquias).

• since as of June 04, 2013 all foreign investments made in the financial and capital markets are subject to a zero rate, Article 15-B has excluded the provisions that established a zero rate for specific transactions carried out within the financial and capital markets, maintaining only the general provisions regarding this subject (i.e., inflow and outflow of funds).
• Based on the adjustment mentioned in item above: revocation of provision that established a zero rate for the settlement of simultaneous FX transactions carried out for the conversion of a direct investment into an investment in the financial and capital market.
  The provision that formerly established a zero rate for the settlement of simultaneous FX transactions carried out with the aforementioned purpose was only applicable to the inflowof funds, in such way that symbolic FX transactions carried out for the return of the funds/settlement of direct investments had always been subject to the general 0.38% (thirty-eight hundredths per cent) rate. Thus, the revocation of this specific provision by Decree No. 8,352/2014 has not in any way changed the taxation applicable to the these transactions, since the newly enacted provision maintains the general provision/rule that establishes a zero rate for the inflow of funds carried out in connection with simultaneous FX transactions, as well as for the inflow of funds for their (foreign) investment in financial and capital markets.
• Maintenance of the zero rate rule for the inflow of funds by means of cancellation of Depositary Receipts for their investment in stock traded in stock exchanges
  The wording of the revoked item XVII of Article 15-A – which formerly established a zero rate for the settlement of simultaneous FX transactions carried out for the inflow of funds with the aforementioned purpose – has been maintained, even though this situation is already encompassed by the rule applicable to simultaneous FX transactions and the general rule for foreign financial investments made in financial and capital markets.
• Simultaneous FX transactions and inflows as “short-term foreign loan” transactions
  Although the new wording given to item XVIII of Article 15-B (regarding simultaneous FX transactions) no longer makes an explicit exception for short-term foreign loan transactions (as it formerly did), the specific item referring to such transactions establishes that a 6% (six per cent) rate shall apply to all and any inflows carried out in connection with short-term foreign loans, even where such inflows take place by means of simultaneous FX transactions, in such way that the explicit exception formerly made by item XIX of Article 15-A was unnecessary, given that there already was a specific provision giving the aforementioned explanation. Thus, any inflows carried out in connection with short-term foreign loan transactions, even by means of simultaneous FX transactions, remain subject to a 6% (six per cent) rate.
• “IOF/Securities”
• The IOF/Securities rate for the trade of Fixed Income Index Fund quotas, whether over the counter or within stock exchanges, is reduced to zero.

Thus, the following provisions are revoked: Article 8, item XII and Article 15-A of Decree No. 6,306/2007; Article 1 of Decree No. 7,412, of December 30, 2010, Article 1 of Decrees No. 7,536, of July 26, 2011, 7,632, of December 01, 2011 and No. 7,683, of February 29, 2012, where they amend Article 15-A of Decree No. 6,306/2007, as well as Decrees No. 6,453, of May 12, 2008; 7,454, of March 25, 2011; 7,456, of March 28, 2011; 7,457, of April 06, 2011; 7,698, of March 09, 2012; 7,751, of June 13, 2012; 7,853, of December 04, 2012; 7,894, of January 30, 2013; 8,023, of June 04, 2013; and 8,175, of December 27, 2013.

The amendments effected by Decree No. 8,325/2014 have entered into force on the date of its publication (i.e., October 08, 2014).

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