XP ETF Suspension: Brazil Broker Halts New Buys of Six Bond Funds Over Tax Doubt
The XP ETF suspension halts new buys in six Brazilian bond funds run by rivals over doubt on whether gains are taxed at 15% or 25%. Holders may still sell. The post XP ETF Suspension: Brazil Broker Halts New Buys of Six Bond Funds Over Tax Doubt appeared first on The Rio Times .
A Brazilian brokerage known as XP has suspended new purchases and transfers into six exchange-traded bond funds managed by rival asset managers. This decision comes due to an unresolved tax question from the Federal Revenue Service. The six bond ETFs are AMAB11, DEBB11, LFIN11, MARG11, GICP11, and NLFA11. These funds track indices of corporate and bank debt, and all six are traded on Brazil's stock exchange, B3.
The funds remain active on B3, unaffected by the pause. The tax dispute centers around whether investors should pay 15% or 25% income tax on their gains. If the funds are taxed at 25%, they could outperform a bank deposit. XP cited the lack of a definitive understanding on the subject, leading to the suspension. The CDI, or Selic, is a key benchmark in Brazil's fixed income market, moving almost in sync with the central bank's policy rate.
Brazilian savings products are quoted as a percentage of the CDI. The tax issue has been debated before; in July 2023, XP halted LFTS11, a Treasury bond ETF, over the same doubt.
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