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Investing.com -- Brazil’s government issued an executive order on Wednesday modifying investment taxes while also publishing a decree that partially reverses recently announced increases to the IOF financial transactions tax.
The government had previously announced in May an increase to the IOF tax on credit and foreign-exchange transactions as part of efforts to increase public revenue.
This tax hike faced strong opposition from Congress and market participants, leading the government to seek alternative solutions as lawmakers threatened to overturn the measure.
The revised IOF decree, published Wednesday evening, rolls back several of the previously announced rate increases, including those on corporate credit and forfait operations.
As an alternative to the IOF increases, the government also published an executive order that requires Congressional approval to remain in effect. This order includes comprehensive changes to income tax on financial investments and increases the tax rate on sports betting companies’ revenue.
Among the investment tax modifications, the government will implement a flat 17.5% rate on investment income and capital gains for stocks and bonds, replacing the current sliding scale that ranges from 15% to 22.5%.
The order also establishes a 5% income tax on investments currently exempt from income levies and increases the tax rate on interest on equity (JCP) payments from 15% to 20%.
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