Brazil to Impose Tax on Crypto Income
Date: 2023-12-04 Author: Dima Zakharov Categories: CRYPTO PAYMENTS
Tax Regulations on Cryptocurrency Income in Brazil
Residents of Brazil will face a tax obligation on their cryptocurrency income, with rates reaching up to 15%. The law dictates that any Brazilian earning more than $1,200 USD (6,000 Brazilian reals) on crypto exchanges outside Brazil will be required to pay taxes starting from January 1, 2024.
This amendment subjects funds to taxation at the same rate as those held within the country. Funds earned before this date will be taxed upon the owner's access, while earnings from funds accessed before December 31 will face an 8% tax rate.
The legislation also impacts "exclusive funds"—investment funds with a single shareholder—and foreign companies operating in Brazil's financial market.
The government aims to collect $4 billion (20.3 billion Brazilian reals) in 2024. Senator Rogerio Marinho expressed disagreement with the bill, stating that the government is imposing the tax due to mismanagement.
Roberto Campos Neto, head of the Banco Central do Brazil, announced plans to tighten cryptocurrency regulations due to its significant rise in popularity in the country. He suspects crypto is used to evade taxes and urged Congress to raise cryptocurrency taxes.
During his address to the parliamentary committee on finance and taxes on September 27, Roberto Campos Neto reported a surge in "cryptocurrency imports" by Brazilians. According to the central bank, cryptocurrency imports from January to August 2023 increased by 44.2% compared to 2022, totaling around 35.9 billion Brazilian reals ($7.4 billion USD).
Campos Neto highlighted the popularity of stablecoins, stating they're used more for payments than investments. He emphasized the bank's response to these trends, tightening regulations and bringing crypto platforms under its control. He added that cryptocurrency-related issues may involve tax evasion or illegal activities.
Meanwhile, the Central Bank of Brazil is developing its digital currency, Drex. In August, it unveiled the central bank's digital currency logo.
