Act eliminates income tax rate on transactions carried out by investors non-resident in Brazil

Government efforts aim to attract foreign investors by expanding the list of investments exempt from income tax

Announced by the government among its efforts to boost foreign investment in Brazil, Provisional Presidential Decree No 1,137/2022 was enacted on September 22, reducing to zero the income tax rate on several transactions for investors non-resident in the country.

The act has extended the zero-percent income tax rate to:

• Fixed-income securities issued by Brazilian companies (e.g.: bonds);
• Financial bills issued by financial institutions (LF);
• Infrastructure Equity Investment Funds (FIP-IE);
• Equity Investment Funds in Intensive Economic Production for Research, Development and Innovation (FIP-PD&I);
• Sovereign wealth funds.

As defined in the act, the reduced rate applies to earnings received between January 1, 2023 and December 31, 2027.

The decree must be approved by the Legislative body within the next 120 days to be signed into law, otherwise its effects will expire.