Bloomberg News

Brazil Central Bank Closes Tax Loophole on Debentures Purchases

December 15, 2011

Dec. 15 (Bloomberg) -- Brazil’s central bank closed a loophole that allowed foreigners to circumvent the so-called IOF tax on financial transactions.

Foreign buyers of untaxed debentures will need to carry out another foreign exchange operation, and pay the 6 percent tax, if they sell the securities and switch to other assets on which it is levied, the central bank said in an e-mailed statement.

Finance Minister Guido Mantega eliminated the IOF tax on local corporate bonds with a duration of more than four years this month as one of a series of stimulus measures designed to prop up growth in Latin America’s largest economy.

--Editors: Richard Jarvie, Robert Jameson

To contact the reporter on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.


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