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Brazil Wants to Reduce Taxes for Foreigners Buying Stocks

Brazil’s Ministry of Finance is studying a proposal to grant certain tax exemptions to foreigners who invest in the Brazilian stock market.

According to the secretary of the National Treasury, Joaquim Levy, the taxes the Ministry has in mind are the income tax and the Provisional Contribution on Financial Transactions (CPMF, the "check tax").

Easing the tax burden on foreign investment would be a way to inject leverage into the country’s financial market, Levy believes. "The government is responsive; it is watching," he says.

One of the proposals under examination was submitted to the federal government at the end of last year by the National Association of Financial Market Institutions (ANDIMA).

An ANDIMA study suggests that reducing taxes on foreign investors could increase the amount invested in fixed-rate titles from the current level of US$ 4.57 billion (R$ 10 billion) to US$ 13.71 billion (R$ 30 billion).

At the time the proposal was presented to the National Treasury, the president of ANDIMA, Alfredo Moraes, stated that the goal is to encourage the participation of foreign investors in order to induce local investors to make longer-term investments and accept more fixed-rate titles.

In Levy’s opinion, Brazilian investors will not consider themselves discriminated against. "This [sort of treatment] is common in most of the world," he said.

He went on to explain, however, that the proposal is still being analyzed and the final word is still out.

The ANDIMA proposal would have foreign investors continue paying taxes at the current rate of 15% on investments of up to one year. The rate would decrease to as low as 0% for investments of more than two years.

Agência Brasil

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  • Guest

    furthermore there is a contradiction….
    ….in the article !

    In the world of international elementary finances there is a difference between a stock and what you call above a “fixed-rates titled” or more commonly called a BOND !

    When a foreigner invests in a stock he must pay a tax on the DIVIDEND.
    When a foreigner invests in a local bond, he also pays a tax on the interets (COUPON or fixed- rate).
    BUT
    When an issuer of a loan goes to the International market for a loan, there is NO TAX on the interets (fixed-rates titled) charged to the one who is lending by buying the BOND..

    Moreas and Levy show they are not very experienced in simple International finances….despite their job titles !!!!!

    This is just a title, but no basic expertise !

  • Guest

    \”This [sort of treatment]…..
    …is common in most of the world,” .

    good….that you wake up….finally. You have been quite late as usual !

    But as you are not common, just bear in mind that what is common is no income tax at all, not even the 15 % during the first year.

    So you can see, by not being common, you already try to change what bis common !!!

    So you woke up…but still need a coffee or two…to realize what is common elsewhere !

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