The Brazilian government is now offering foreign investors a tax exemption connected to either the purchase of the nation's mortgage-backed securities (MBS) or the investment in funds that purchase these securities.
According to a Bloomberg News report, the tax break applies if proceeds of the debt are used on ‘investment projects’ and the bonds have an average maturity of at least four years. The tax break is designed to raise $493 billion for the construction and maintenance of roads, factories and airports. The new tax exemption is also planned to address economic imbalances in the country: sales of new Brazilian debt supported by real estate loans fell almost 50% this year, while the nation's outstanding debt rose 51%. Â
‘The concept of investment is purposely very broad just to give market players flexibility,’ says Pablo Fonseca Pereira dos Santos, deputy secretary of economic policy at the Ministry of Finance. ‘A new building is for sure an investment, and so is a house expansion or a new factory.’