Neither too much, nor too little: IOF in export transactions

This phrase reflects the new position of the Brazilian IRS on the incidence of Tax on Financial OperationsIOF) on export revenue inflows.

Last December, the IRS published a note preventing exporting companies from having a good night sleep. The IRS began to demand the IOF on foreign exchange transactions on the inflow of funds in Brazil immediately after the conclusion of the export process. In other words, the date for securing the zero tax rate on money entering the country would be the date of the completion of the export process.

With this, the beginning of the year was hectic for exporters, since banks began to inform the companies that they would withhold the applicable tax.

It was then that the Attorney General’s Office of the National TreasuryPGFN) issued an opinion that made the deadline more flexible, motivating the IRS to consider its position and back down, publishing on July 15 another note modifying  the previous one.

According to the new position of the IRS, the taxpayers must observe the form and the term established by both the National Monetary CouncilCMN) and the Central Bank, so that the period to ensure the zero rate of resources in the country becomes 750 days.

Neither too much, nor too little: the deadline is no longer indefinite, nor immediately after the finalization of exports. The tax authorities have chosen a middle ground.

Although the new position is positive for taxpayers, it can generate even more bureaucracy for Brazilian companies that will probably have to prove to banks that the inflow of funds is linked to the export procedure respecting the deadline set by the monetary agencies.

By Marcela Leal Sammarone, associate at Candido Martins Advogados
tributario@candidomartins.com.br