The Federal Government enacted a new legal framework for the foreign exchange market and the movement of foreign capital, seeking to improve the Brazilian business environment regarding foreign trade and the entry of foreign capital.
The Federal Government enacted Law n.º 14.286/2021, consolidating a broad number of legal provisions related to the Brazilian foreign exchange market and its rules concerning the movement of international capitals. It established new legal dispositions seeking to improve the Brazilian business environment regarding the entry of foreign capital, foreign trade operations by domestic and foreign companies, and the international circulation of the Brazilian currency (Reais/BRL).
The new law, which comes into force on December 30, 2022, consolidated more than 40 legal acts (more than 400 articles) into one law (29 articles), according to the Central Bank of Brazil (BCB). According to BCB, the new law also contributes to aligning the Brazilian legal framework with international best practices, including the OECD Code of Liberalisation of Capital Movements and of Current Invisible Operations. Additionally, the central bank provided an English version of the new law for reference (non-official translation).
Among the new legal dispositions concerning the foreign exchange market and the movement of international capitals, article 13 of the new law consolidated the circumstances in which the payment of obligations in Brazil with foreign currency is allowed. Such circumstances now include item “VII”, when exporters enter into contracts with a concessionary company (as well as a permittee, authorized party, or lessee) from the Brazilian infrastructure sector as counterpart. According to the Ministry of Infrastructure, enabling the establishment of contracts in a foreign currency will safeguard long-term investments in infrastructure against currency volatility.
Furthermore, article 15 of the new law enabled authorized financial institutions (i.e., those authorized by BCB to operate in the foreign exchange market) to allocate resources, including those raised domestically, in credit and financing operations abroad (in addition to domestic operations). Note that the inflow and outflow of BRL or foreign currency must be carried out solely through an authorized financial, provided specific exceptions (article 14). The BCB will also further regulate the disposition, including limits and conditions for such financial institutions.
Regarding the international circulation of the Brazilian currency, article 6 of the new law enabled authorized banks located in Brazil to carry out payment orders received from abroad or sent abroad in BRL, through the use of accounts entitled to foreign financial institutions registered in BRL. The BCB will further regulate the disposition.
