DEZ
FINANCE
[02/17/2006 - 10:45]
Brazil offers tax exemption to foreign investor that buy government securities
According to the Brazilian Federal Treasury secretary, Joaquim Levy, the measure published yesterday should bring around US$ 4 to the country yet this year and up to US$ 10 billion in 2007. According to him, other countries do the same, among them France, Germany, Argentina and Mexico.
Agência Brasil*
Brasilia - The Brazilian federal government published yesterday (16) a provisional measure, exempting from income tax the profits made by foreigners that purchase Brazilian government securities. The Federal Treasury secretary, Joaquim Levy, said that the exemption will increase the purchase of Brazilian papers.
With this increase, according to him, the government will, ideally, be able to reduce the interest rate, since investors accepted lower return after the exemption. Levy estimates that the measure may bring about an additional US$ 4 billion to the country yet this year, possibly reaching US$ 10 billion next year.
The Treasury secretary considers it "natural that foreign investor receive differentiated treatment, here and in the other countries". He mentioned as an example of countries with similar measures France, Germany, Argentina and Mexico. "We're not innovating," he says. "We are only adjusting the positive evolution of the economy in the last few years."
The measure published in the Federal Official Gazette also exempts the Provisional Contribution on Financial Transactions (CPMF) on the purchase of shares in public offerings, outside the stock exchange. Up until now, only operations in stock exchanges were exempted.
The minister of Planning, Paulo Bernardo, said he didn't believe that dollar rates in relation to the Brazilian real would drop even more with the income tax exemption for foreigners that purchase securities.
"We have a very big volume of resources that enter the country and there is this problem of exchange rates rising. But the measure's aim is to attract capital to finance our internal debt," said the minister. With a greater entry of dollars into the financial market, the North American currency's value could drop even more. This week, one dollar reached the value of R$ 2.14, the lowest rate since 2001.
*Translated by Silvia Lindsey |
