Glossary

IOF

Brazilian tax on foreign exchange transactions, charged when the purchase is processed abroad, which appears on the buyer's statement.

IOF applies to foreign exchange transactions. When a Brazilian buyer pays a charge processed outside the country, their bank converts the currency and collects the tax, which appears as a separate line on the statement.

For the seller, the effect is one of perception. The buyer sees a larger amount than what was advertised at checkout and associates it with an improper charge. It's a classic cause of disputes and complaints.

Processing in reais, inside Brazil, eliminates the foreign exchange transaction and, with it, the tax.

Documentation exists so a seller never learns a rule on the day it costs them. Worth reading before you need it.
Wellington CostaGlobal Payments Specialist

Need to deal with iof in practice?

Mundpay processes payments in 190 countries with local currency checkout, a human risk team and fast payouts. Open an account and test it against your own operation.

Abrir minha conta na Mundpay

Written by Wellington Costa Global Payments Specialist

Writes about payment infrastructure, checkout conversion and chargeback reduction. Works directly with digital product sellers, affiliates and creators selling to more than 40 countries through Mundpay.