MercoPress. South Atlantic News Agency

Brazil plans to tax local corporations overseas bond issues, says financial media

Government fears dollar exposure of Brazilian corporations

The Brazilian government is planning to impose a financial operations tax on overseas bond issues by Brazilian companies, local financial daily Valor Economico reported Monday.

The tax is part of a government drive to reduce U.S. dollar inflows and arrest the appreciation of the Brazilian Real against the U.S. dollar. The Real has gained 45% against the dollar over the past two years, hurting exports.

According to the newspaper, which cited an unnamed person close to the government, officials are also concerned about a recent increase in dollar-denominated debt among Brazilian companies. The government is planning to impose a financial operations tax of 6% on such operations.

In the first two months of the year, local companies increased overseas debt by 16.4 billion US dollars to 190.3 billion USD, according to the central bank.

In 2008, some local companies suffered huge financial losses when dollar-denominated debt ballooned because of a rapid depreciation of the Brazilian real against the U.S. dollar. The Real depreciated strongly against the dollar from 2008 to 2009 because of the global financial crisis. In 2009, the Real began a swift recovery.