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Brazil ups taxes on debit cards and travelers checks to contain outgoing tourism

Sunday, December 29th 2013 - 08:30 UTC
Full article 29 comments
Spending by Brazilians traveling overseas had widened the current account deficit Spending by Brazilians traveling overseas had widened the current account deficit

The Brazilian government said on Friday it will raise a tax on operations with debit cards and travelers checks made abroad, in a move that will raise the country's tax intake by 552 million Reais (234.65m dollars) per year.

 Starting on Saturday, the government will hike the financial operation tax, known as IOF, to 6.38% from 0.38% on those operations.

A rapid increase in spending by Brazilians traveling abroad over the last few years has helped widen the country's current account deficit sharply. The higher taxes will also be charged on the purchase of foreign currency abroad and operations involving pre-paid cards outside Brazil.

The finance ministry said in a statement that the move aims to stop consumers using one payment method over others because of tax benefits.

Brazilians had been using travelers checks and debit cards abroad instead of credit cards as transactions on them paid a lower tax rate.

The ministry said the IOF tax charged on the purchase of foreign currency in the Brazilian market remains unchanged.

Categories: Economy, Politics, Tourism, Brazil.
Tags: Brazil.

Top Comments

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  • ChrisR

    I thought everything was perfect in Brazil, Brasiliero certainly says things are.

    Perhaps the money raised is to help all the Senators and “Lawmakers / breakers” to have a hair transplant each!

    Brazil: running around like a financial chicken with its head cut off!

    Such a grown up country, NOT.

    Dec 29th, 2013 - 10:13 am 0
  • yankeeboy

    The only reason to do something this ridiculous is to stem reserve drain. Are they worried?

    Dec 29th, 2013 - 02:13 pm 0
  • cornelius

    I visit Brazil often I, believe is the least competitive country of emerging economies their tax structure is such that every company demand one person solely to calculate the business taxes which they are some 37 of them.
    They have 23 million people on welfare.
    The social cost of doing business for a foreign company is tremendous.
    If you can get 2 to 3 % return on capital you are doing well.
    Brazil is an antibusiness country they protect their own industry to the detriment of free competition.
    Once I had to buy a piece of imported equipment they spend ½ hour calculating the taxes what a waste of productivity no wonder they have coffee on every business for the customers.

    Dec 29th, 2013 - 03:34 pm 0
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