Brazil Raises Tax on Debit Card Purchases Abroad
Brazilians traveling abroad will now have to pay much higher taxes on their debit card purchases while they are in other countries. The Brazilian government is raising the international financial operations (IOF) tax from 0.38% to 6.38% as we enter 2014.
This sudden change is estimated to bring in over $230 million in U.S. dollars annually for the country. Authorities say this money will be used to better the communities, and allow the Brazilian government to establish greater financial stability.
There has been a recent increase in the number of Brazilians traveling abroad. If this continues to grow, the new taxes will bring in even greater revenues.
This higher tax will also be charged on prepaid cards used outside of Brazil, as well as transactions involving the purchase of foreign currency abroad. Brazilians have been more inclined to use travelers checks and debit cards in place of credit cards as a way to save money in taxes. This new tax increase should level the playing field.
The IOF tax on the purchase of Brazilian currency remains unchanged at this time.