Have you ever heard of the IOF (Tax on Financial Transactions) and understand its operation? If not, let us explain how this tax influences when making a loan or personal payday loan. Stay with us.
After all, what is the IOF?
The Tax on Financial Operations as its name suggests, is a tax levied to carry out credit, foreign exchange, insurance or securities transactions. In the personal payday loan is no different, the IOF tax is charged in the month-to-month installment of the claimant.
How is the loan IOF calculated?
Credit operations that were contracted until January 21, 2015 the rate charged is 0.38% added to a daily rate of 1.5% per annum, which is calculated at the time of the credit release based on the amount requested and the number of plots.
This tax is levied on credit operations carried out by:
– Financial Institution;
– Companies that perform the activities of cumulative and continuous provision of credit advisory services;
– Legal entities or between legal entity and natural person;
What is IOF for?
This tax is for the Brazilian government to analyze the demand for credit and supply in the country.
How can the IOF influence the loan application?
The IOF can help in choosing the best CET that fits in its budget, since this tax is part of the Total Effective Cost (CET) of the operation.
It is worth mentioning that the IOF does not influence the interest rate of the loan, since it is charged on the main cost of the operation, and also does not affect the installments already paid. In addition, the value of the IOF is limited to 3% of the contracted value, ie, even if the operation exceeds 365 days, the maximum rate will remain the same.
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