Foreign investors have welcomed the Brazilian government’s decision to exempt them from paying tax on gains made from trading local sovereign bonds. President Lula da Silva scrapped the 15% tax last month as part of Brazil’s strategy to add depth to the local currency bond market. Local investors will still have to pay the tax.
Joaquim Levy, Brazil’s national treasury secretary, says he expects that the move will help double foreign investors’ holdings of local currency debt to $10 billion within a year.
The move will also help Brazil to reduce its external vulnerabilities.
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