New foreign exchange law: BCB opens public consultation on proposal of regulation for operations of foreign credit and foreign direct investment

On July 19, the Central Bank of Brazil (“BCB”) opened a Public Consultation, through Notice No. 91, for a proposal of a regulatory act aimed at regulating (i) foreign capital in Brazil, related to operations of foreign direct investment and foreign credit and (ii) the provision of information to BCB, within the scope of Law No. 14,286, of December 29, 2021 (“New Foreign Exchange Law”). Interested parties can submit suggestions and comments to the BCB regarding the draft of the regulatory act until September 02, 2022.

The proposal was introduced with the purpose of regulating certain elements of the New Foreign Exchange Law, which will enter into force on December 31, 2022, and that seeks to improve the business environment in Brazil, in addition to facilitating the insertion of the Brazilian companies into international markets and increase the attractiveness of the Brazilian economy for foreign capital.

The proposal introduces proportionality criteria in order to establish requirements for the provision of information on foreign credit and foreign direct investment, taking into consideration its values and characteristics.

Among the main innovations introduced by the proposed regulation, the following are highlighted:

• Provision of information to BCB related to (i) foreign credit and (ii) foreign direct investment only for a limited set of operations, and considering the range of amounts and specific conditions. Initially, the suggested amounts are: (a) USD1 million for foreign credit operations, anticipated receipt of export (or payment prior to the export) and external finance lease-purchase agreement (the last two with a payment term of more than 360 days); (b) USD500,000.00 for financing operations of goods or services importation, with payment term of more than 180 days; and (c) USD100,000.00 for foreign direct investment;
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• Exclusion of the overlap between foreign capital census, quarterly economic-financial statements and annual ownership structures, along with unification of rules and establishment of unified criteria for provision of information on the stock of Foreign Direct Investment (FDI);
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• End of the requirement to provide information to the BCB regarding agreements between residents and non-residents related to the (a) use or assignment of patents, trademarks of industry or commerce and supply of technology for financial transfers, on account of royalties, as well as (b) agreements related to provision of technical services and similar activities, to external operational lease-purchase agreements and to rent and chartering services;
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• End of the overlap between the fields to be filled out in the foreign capital census and the data of foreign debt operations;
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• End of the restriction on international remittances for payments of principal and interest on the foreign credit operations with no inflow of resources in Brazil. In addition, mandatory provision of information on foreign credit operations without inflow of resources, in accordance with certain criteria; and
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• End of the obligation to carry out simultaneous exchange operations or international transfers in Brazilian Reais for all cases related to foreign capital.
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The BCB is expected to announce a new public consultation encompassing aspects related to the (i) investments in financial and capital markets carried out by non-resident investors in Brazil and (ii) Brazilian capital abroad.

Demarest’s Banking and Finance team is working on the submission of comments to the BCB. We are available to provide any further clarifications that may be necessary in regard to this rule and other matters of the sector.
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