Brazil Wants to Introduce Higher Taxes on Crypto
Legislators in Brazil are progressing with a legislative initiative aimed at heightening taxes on cryptocurrencies held abroad. Reports from the region indicate that a congressional committee has given the green light to amendments within a bill that designates cryptocurrencies as “financial assets” for tax purposes concerning foreign investments.
Furthermore, the proposed bill places taxation on gains linked to fluctuations in cryptocurrency prices in relation to Brazil’s national currency and foreign exchange rate variations. Deputy Merlong Solano clarified that this adjustment intends to establish equitable taxation, as current foreign crypto investments receive preferential tax treatment.
Under the updated regulations, earnings obtained from overseas activities up to 6,000 Brazilian reais (~$1,200) will be exempt from taxation. Earnings ranging between 6,000 and 50,000 reais (~$10,000) will be subject to a 15% tax rate, while amounts surpassing this range will incur a 22.5% tax rate.
The legislation exclusively impacts cryptocurrency exchanges without a presence in Brazil. Experts believe that these changes could render local exchanges more cost-effective for certain investors, particularly those with earnings surpassing the highest tax bracket. This shift in law might also invigorate cryptocurrency exchange operations within the nation and encourage international players to establish offices in Brazil.
Several prominent global cryptocurrency exchanges, including Binance, Coinbase, Bitso, Crypto.com, as well as local entities such as Mercado Bitcoin and Foxbit, operate within Brazil.
The Brazilian National Congress is set to vote on the bill on August 28. If ratified, the newly proposed taxation framework will come into effect in January 2024.