Interpretative Declaratory Act No. 03/2013: FX transactions comprised by changes in IOF/FX for Foreign Investors –
Fixed Income Investments (Decree nº 8,023/2013)
July 2, 2013
It was published in the Brazilian Federal Official Gazette of yesterday (i.e., July 1st, 2013) Interpretative Declaratory Act No. 03, of June 28th, 2013 (“ADI/RFB No. 03/2013”), that intends to clarify which are the foreign exchange (“FX”) transactions comprised by Decree No. 8,023, of June 04, 2013 (“Decree No. 8,023/2013”).
As background information already provided in the V&G News Special Edition no. 64 of June 5th, 2013, such Decree changed items XI and XII of article 15-A of Decree No. 6,306, of December 14, 2007 (“Decree No. 6,306/2007” – “IOF Regulation”), reducing the applicable tax rate of Tax on Credit, Foreign Exchange, Insurance, Bonds’ and Securities’ Transactions, (“IOF”), specially the mode applicable to FX transactions (“IOF/FX”), from 6% to zero for the following transactions:
(i) settlement of FX agreement for the inflow of funds into Brazil (including simultaneous FX transactions) for the payment of collateral margin, initial or additional, required by the Stocks, Futures and Commodities Exchange Market in Brazil (“Stock Exchange Market”); and
(ii) settlement of FX agreement for the inflow of funds into Brazil (including simultaneous FX transactions) for the purpose of investments in financial and capital markets, generically considered fixed income investments and/or transactions undertaken outside the Stock Exchange Market in Brazil.
The current ADI/RFB No. 03/2013 intends to clarify that the FX transactions comprised by the new IOF/FX rules above (therefore, the IOF/FX Zero rate above-mentioned) are the ones executed (and not settled) as of June 5th, 2013.
However, considering the wording of the IOF Regulation (with changes provided by Decree No. 8,023/2013), it is our opinion that such ADI can be submitted to discussion before Brazilian judicial courts.
THIS IS MERELY AN INFORMATIVE NEWSLETTER, RESTRICTED TO VELLOZA & GIROTTO CLIENTS. QUESTIONS AND CLARIFICATIONS ON THE MATTERS CONTAINED HEREIN SHOULD BE ADDRESSED TO OUR OFFICE.
