There will be no more IOF on purchases abroad and other operations

O Financial transaction tax (IOF) will have its rate reduced gradually, starting today, January 2nd. The intention is for the tax to be zeroed by the year 2028, when it may be extinct. The measure is based on Decree No. 10,997/2022, which is a fundamental part of Brazil's inclusion in the Organization for Economic Cooperation and Development (OECD).

In this way, the rate that was in the amount of 6.38% when using a credit card for international transactions, in purchases in foreign sites or spending in other countries, for example, will have one percentage point less per year, and should be zeroed in the year 2028.

In case you don't know very well how the IOF works or in which situations it is applied, just check below.

When is the IOF charged?

The Tax on Financial Operations is charged, as its name already reveals, when there is a financial operation, such as certain investments, loans and other similar situations. Among the most common examples in which there is an incidence of IOF, we have:

• Sell ​​or buy international currency;
• Redeem investments;
• Use revolving credit or overdraft;
• Make international, face-to-face or digital purchases with your credit card.
• Take out insurance;
• Hire a financing or loan.

It should be noted that this is a federal tax, due by legal entities and individuals who carry out any type of financial operation, and the amount charged depends on the value of the operation, time and type.

In this way, with the reduction of one percentage point per year until it is completely zeroed in 2028, its schedule starting in that year, 2023, will be:

• 2023: drop from 6.38% to 5.38%;
• 2024: drop from 5.38% to 4.38%;
• 2025: drop from 4.38% to 3.38%;
• 2026: drop from 3.38% to 2.38%;
• 2027: drop from 2.38% to 1.38%;
• 2028: 1.38% drop to 0.

Thus, at the end of the measure, Brazil will adapt to the OECD tax rules, thus being able to be part of the group.

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