January 29, 2022

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Increased IOF up to loans, revolving cards and overdrafts

Increased IOF up to loans, revolving cards and overdrafts

Temporary increase in financial transaction tax (IOF), announced by the government on Thursday (16), It will make the tax on credit operations a little more expensive.

This measure extends the interest rate charged by international financial institutions on credit operations for individuals and companies from Monday (20), when the measure comes into effect, until December 31 of this year.

The intention, according to the government, is to raise funds to finance Brazil Aid – Extended version of Bolsa Família – Plus research related to Fiocruz. Funding for the program in subsequent years is expected to come from other sources that are still being determined.

Credit, foreign exchange, insurance and some investment transactions are currently levied by the IFC in different ways in each.

The temporary increase will only be valid for credit transactions Others follow as they are.

It will affect practically all credit operations. For an individual, it falls on overdraft, personal credit, and vehicle financing. For legal entities, it affects working capital and prepayment of receivables, for exampleNicholas Tengas, chief economist at the National Association of Credit, Finance and Investment Institutions (Acrefi).

The IOF also charges the credit card, but only when the person delays the bill and falls into revolving credit – in this case, the IOF that charges will be higher as well.

The increase applies to the daily IOF for these operations, which is calculated on the amount borrowed or on the amount of the debit balance on the card.

For individuals, it goes from the current rate of 0.0082% per day (equivalent to 3% per year) to 0.01118% per day (4.08% per year). For legal entities, it goes up from 0.0041% to 0.00559% per day (or 1.5% to 2.04% per year).

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0.08% increase in debt

A hypothetical simulation conducted by Nubank showed that for a 30-day personal loan of R$1,000, the increase means an additional account of R$0.89 in one month.

At the current rate, the amount paid by the daily IOF will be R$ 2.46 in 30 days. With the new higher rate, it will be R$ 3.35. It’s a 36% increase in the IDF.

Looking at the total amount of debt, the increase is 0.08% in one month: the total amount that the customer will pay, at the end of the 30 days, will be R$ 1,057.15 with the new IOF, instead of the current R$. 1,056.26.

The amount also includes interest, which varies between institutions, and a fixed IOF portion of 0.38% on the amount borrowed (BRL 1,000). This IOF stator also does not change – the daily rate will only increase. In this example, the default interest of 5% per month was considered.