September 1, 2015 / 12:53 PM / 2 years ago

Brazil reinstates IOF tax on BNDES loans in presidential decree

SAO PAULO, Sept 1 (Reuters) - The Brazilian government late on Monday reinstated a financial transaction tax on loans from state development bank BNDES, part of efforts to discourage subsidized lending and narrow the country’s swelling budget deficit.

According to an extraordinary edition of the government’s official gazette, President Dilma Rousseff signed a presidential decree revoking the prior exemption from the so-called IOF tax on loans made by the BNDES or its subsidiaries.

The decree did not give any details on the new IOF tax rate for borrowers from BNDES.

The decision, effective immediately, will be further explained by officials in a news conference at the tax and customs agency later on Tuesday.

The move aims to reverse policy decisions from Rousseff’s first term that many analysts blame for the precarious state of public finances.

On Monday, Rousseff sent Congress a budget bill forecasting a primary budget deficit next year and urged lawmakers to help fix a fiscal crisis that threatens the country’s investment-grade rating. (Reporting by Guillermo Parra-Bernal and Alexandre Caverni Editing by W Simon)

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