IOF

The concept

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.

How it shows up in practice

A client from Uruguay buys your course for 99 dollars. The purchase is processed abroad and their bank converts it to Uruguayan pesos and applies a tax on the operation. On the invoice they receive, the price appears higher because of the IOF, and they tell you that you overcharged.

IOF is a Brazilian tax on currency exchange operations. When the buyer is Brazilian and pays abroad, their bank charges a tax that appears as a separate line. This increases the amount they see, causing disputes. Processing in reais, in Brazil, eliminates the need for currency conversion and with it the tax.