Below is some information on the process of purchasing in foreign exchange.
As a general rule: for card transactions, international purchases in any currency are converted to USD. And then it is converted to BRL.
And how to transform USD into BRL?
Dock uses the PTAX DollarPTAX Dollar - It is a reference exchange rate calculated on a daily basis by BACEN, based on the average of the buy and sell dollar rates along the day. from the previous working day and adds a Spread of 4% to cover possible exchange fluctuations and the settlement costs of an international transaction. In addition, there is also an IOFIOF - Imposto sobre Operações Financeiras. It is tax on Financial Operations in Brazil. tax of 6.38%, according to the current regulation.
Example: A purchase of USD 100 made on Dec 9 uses the PTAX dollar of Dec 8. Suppose that for this date, PTAX was BRL 5,09. Then a 4% Spread is added and the new rate is BRL 5,29. The purchase value would be 5,29 x USD 100 and the result would be BRL 529, without taxes. If IOF tax is applied, then it would be BRL 529 x 1,0638. The final purchase value with taxes would be BRL 562,75.
- BaaS Model - There is a Spread of 4% to cover operational costs, such as: sending remittances abroad (swift), maintenance of settlement account outside the country for international transactions, opportunity cost, and exchange rate cost.
- FaaS Model - Dock ClientDock Client - "Dock Client" is the company that uses Dock's products in the FaaS (Fintech as a Service) model. "Dock Partner" is used to call a company using Dock's products in the BaaS (Banking as a Service) model. will choose the rate (%) to be used, as long as it is compatible with the market average (4%) and not higher than the market maximum (5.5%).
In business models, in which Dock is the Card Issuer (using a Dock license, BIN Sponsor), Dock does not return the remaining Spread to Dock PartnerDock Partner - Dock Partners are companies using Dock services in a BaaS model.s. Because the Spread covers the above mentioned operational costs.
In cases in which the Dock Partner/Dock Client is the Card Issuer (not using a Dock license), then Dock returns the remaining Spread to Dock Partner/Client.
According to Article 11 on the IOF Regulation, the settlement of the currency exchange transaction is a taxable event and consequently, taxes are due and IOF is correctly applied.
IOF Taxable Events
In international credit card transactions, what determines the incidence of IOF will not be the transaction itself, nor the possible reversal of this transaction. What triggers the IOF is the date of the transfer from the card scheme to the merchant, which made the sale to the cardholder. And this is the moment that the settlement of the exchange operation occurs.
In case this purchase transaction is disputed and a refund is approved (after Dock’s evaluation), two different scenarios will follow:
- If the refund to the cardholder occurs before the card scheme transfers the value to the merchant, then this event is not taxable and IOF is not due. The transaction value will be reimbursed to the cardholder and there will not be IOF tax charges.
- If the refund to the cardholder occurs after the card scheme transfers the value to the merchant, then IOF is due. Although the transaction has been disputed and canceled, the settlement of the currency exchange transaction occurred in order to pay the merchant and it means that the IOF tax is due and will be applied.
This is confirmed by Article 118 of the National Tax Code (Código Tributário Nacional), which mentions that the legal definition of a taxable event is interpreted considering the legal validity separated from the acts effectively carried out by the taxpayers, responsible parties, or third parties, as well as the nature of its object or its effects.
If the transaction is disputed and considered not valid after the triggering event of the IOF (i.e., the transfer of the value from the card scheme to the merchant that made the sale), even so, taxes are due and Dock still needs to pay the IOF for this transaction.
In fact, this is a recommendation as mentioned in Resolution Nr. 3694 of CMN, which provides that institutions authorized to operate by BACEN, when contracting operations and rendering services, must ensure, among other conditions: the adequacy of the products and services offered or recommended to the needs, interests, and objectives of customers and users.
Updated 8 months ago