The Finance Minister, Guido Mantega, announced this Thursday measures to stimulate and strengthen the Brazilian economy. Initiatives aim to encourage investment, credit and consumption amid an adverse international scenario. Three decrees and a Provisional Measure (MP) will be published in an extra edition of the Diário Oficial da União (Official Government Press).

One of the decrees reduces the tax on financial transactions (IOF) in some modalities. The 2% tax falls to zero on external investments in stocks, venture capital and cancellation of receipts of Brazilian stocks traded overseas. The measure encourages the income of foreign capital with long-term investment profile.

The IOF tax charged over investments of non-residents in long-term private securities (over four years) is also being reduced from 6% to zero. This measure also stimulates investments and long-term private financing. As for consumer credit, the IOF tax rate falls from 3% to 2.5% per year (from 0.0082% to 0.0068% per day), an initiative that encourages financing operations within domestic market.

The other decree reduces taxation on industrialized products

The (IPI) tax incident on stoves, refrigerators and freezers, clothing washers and similar laundry models, called white line items, aiming to encourage the consumption of durable goods, has also been reduced. The discharge is applicable for products with energy efficiency index class A and will be in force until March 31, 2012.

The Provisional Measure (MP) that is also being published today, establishes the increasing of the amount for classification of popular home building  to joining the special arrangements for taxing (RET) of civil construction applicable to real estate developers with projects under the program Minha Casa Minha Vida (My House My Life). The minimal amount goes up from R$ 75,000 to R$ 85,000. The initiative fits the program to current market conditions. In the same MP, the Government reduces from 9.25% to zero the rates of PIS/Cofins on pasta products until 6/30/2012 and extends until 12/31/2012 the burden of such taxes on wheat, wheat flour and bread – measures that should contribute to reduce indirect taxation on food.

01 December 2011