Brazil unveils tax cut on foreign loans

The Brazilian government announced a tax cut Wednesday expected to help prop up the Brazilian real against the U.S. dollar.
The measure eliminates the so-called IOF tax, which is applied to financial operations, from any foreign loans with a maturity of at least 180 days. Previously, the minimum maturity for loans exempt from the IOF tax was one year.
Loans with a maturity of less than 180 days will continue to pay a 6- percent IOF tax.
With the measure, the government would not collect a total of 10.3 million reals (4.5 million U.S. dollars) in IOF taxes in 2014, and 18.1 million reals (7.9 million U.S. dollars) in 2015.
According to the country's Finance Ministry, the measure aims to "make it easier to get foreign funding," which could have a positive effect on the offer of funding to companies in Brazil.
Finance Minister Guido Mantega said Brazil did not intend to attract speculators with the measure, but actual investments.
He also stressed the need to "balance" the currency exchange market.
The U.S. dollar has been strengthening against the real, with the exchange rate reaching 2.28 reals to the dollar on Wednesday.