Brazilian Revenue will no longer charge IOF on export exchange

The Brazilian Federal Revenue will no longer charge the Tax on Financial Transactions (IOF) on foreign exchange transactions related to the entry of export revenues in Brazil. The Federal Official Gazette published on Wednesday (24) a consultation solution to clarify exporters on the incidence of IOF and reformulate their understanding from last year.

According to the National Confederation of Industry (CNI), at the end of last year, the Revenue began to demand the payment of 0.38% on foreign exchange that entered the country. At the time, the IRS’s interpretation was that the exemption would be restricted to those who internalized the export revenue on the same day of the export operation. According to the CNI Export Competitiveness Forum, companies were unable to perform the export exchange operation on the same day.

“The exporting companies were very worried. About 90% of these funds are internalized, but not on the same day, due to time zone, reserve to pay suppliers, among other reasons,” explained CNI Commercial Policy manager Constanza Negri, adding that the confederation presented several documents to question the Revenue’s change in interpretation of the rules.

At the time, CNI estimated losses of $ 3.7 billion to exporters this year, if the decision was upheld. According to Constanza, companies have even filed lawsuits against the IRS to maintain the exemption.

According to the consultation solution published in the DOU, in the case of foreign exchange operations related to the entry of goods and services export revenues into the country, the IOF tax rate is zero. However, deadlines must be met for companies to be exempt, according to the rules of the National Monetary Council (CMN) and the Central Bank. According to the document, the export exchange liquidation contract shall be entered into for prompt or future settlement, prior or subsequent to the shipment of the goods or the rendering of the service, observing the maximum period of 750 days between the export operation and liquidating the exchange contract in order to receive the export revenue.