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January 2, 2014

Brazil hikes IOF tax on debit card transactions abroad

The Brazilian government has increased tax on debit cards and traveler's cheques based transactions made abroad.

By Verdict Staff

The Brazilian government has increased tax on debit cards and traveller’s cheques based transactions made abroad.

Known as IOF, the financial operation tax on those operations has been raised to 6.38% from 0.38%.

With this development, the country’s revenue is expected to boost by BRL552m ($234.65m) a year.

Brazilian finance ministry said that the move prevents consumers from using one payment method from being undermined by others because of tax benefits.

However, tax on the purchase of foreign currency in the Brazilian market remains unchanged, it added.

Over the past few years, Brazilians have been using travellers cheques and debit cards for overseas transactions, instead of credit cards, as it has a lower tax rate.

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