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Brazil Removes IOF Tax On REITS

Tuesday, February 5, 2013

The Brazilian government has introduced a 0% IOF rate (financial transactions tax) on share purchases in real-estate investment trusts. (REITs).

According to a notice published in the nation's Official Gazette, signed into law by President Dilma Rousseff and Finance Minister Guido Mantega, the rate fell to 0% from 6% as of January 31, 2013. The government explained that the measure is aimed at stimulating long-term investment.

The Brazilian government has tinkered with its IOF tax numerous times over the past three years, partly to stem the rising value of the nation's currency, the real, but most recently to stimulate consumer spending and much-needed investment in infrastructure, with the nation due to hold the world's two largest sporting events in 2014 and 2016 (the soccer World Cup and the Olympics).

In August 2012, the government also approved an exemption from IOF for insurance policies typically entered into when negotiating infrastructure contracts, which were earlier subject to a 7.38% rate.