- Gains ranging between 6,000 and 50,000 reais (about $10,000) would be subject to a 15% tax rate
- The legislation will impose taxes on profits derived from fluctuations in cryptocurrency values compared to Brazil’s official fiat currency
In a significant move, Brazilian legislators are pushing forward with a new bill that would raise taxes on cryptocurrencies held outside the country. Reports indicate that a congressional committee has approved revisions to the bill, officially categorizing cryptocurrencies as “financial assets” for taxation purposes in relation to foreign investments.
The proposed legislation also aims to impose taxes on profits derived from fluctuations in cryptocurrency values compared to Brazil’s official fiat currency, as well as changes in foreign exchange rates. Congressman Merlong Solano emphasized that these amendments seek to establish a more equitable tax framework, as current regulations provide preferential tax treatment for overseas crypto investments.
Under the new amendments, earnings up to 6,000 Brazilian reais (approximately $1,200) would be exempt from taxation. Gains ranging between 6,000 and 50,000 reais (about $10,000) would be subject to a 15% tax rate, while amounts exceeding this threshold would incur taxes at a rate of 22.5%.
For investors, the revisions could translate to tangible benefits. Overseas earnings up to 6,000 Brazilian reais (approximately $1,200) would be tax-free under the new regulations. Earnings within the range of 6,000 to 50,000 reais (roughly $10,000) would face a 15% tax, while profits exceeding this range would be subject to a 22.5% tax.
The legislation explicitly applies only to cryptocurrency exchanges that lack a physical presence in Brazil. This development could encourage increased activity in local exchanges, attracting investors who fall within the higher tax brackets. Additionally, the law could potentially stimulate the establishment of offices by foreign players in the country.
The decisive vote on the bill is scheduled to take place on August 28 in the Brazilian Congress. Should the bill receive approval, the new tax measures will come into effect from January 2024.
Blockchain analytics firm Chainalysis has designates Brazil as the leading Latin American nation and the seventh globally in terms of cryptocurrency adoption, further solidifying the country’s position in the worldwide crypto sphere. The cryptocurrency landscape in Brazil is already home to several global exchanges, including Binance, Coinbase, Bitso, and Crypto.com.
Local players such as Mercado Bitcoin and Foxbit also contribute to the dynamic market. Highlighting the growing traction of cryptocurrencies in Brazil, recent data from the Federal Revenue Service (FRB) reveals a substantial surge in engagement.
Over 3.2 million individuals and more than 89,000 registered Brazilian businesses actively participated in crypto-related activities in June. This data underscores Brazil’s formidable presence in the rapidly evolving digital financial landscape.