Brazil Approves New Cryptocurrency Tax Law Amidst Market Surge
The latest income tax regulations approved by the Brazilian Senate bring significant changes, particularly in taxing earnings from cryptocurrencies held on foreign exchanges.
Under this newly sanctioned bill, Brazilians may face a maximum tax rate of 15% on such earnings. This bill, having received approval from the Chamber of Deputies, is now awaiting President Luiz Inácio Lula da Silva’s sanction, having originated from his administration.
Starting January 1, 2024, individuals in Brazil earning over $1,200 (6,000 Brazilian reals) from foreign exchanges will be subject to this tax. The tax rate for international exchange holdings will align with that applied domestically. However, earnings accessed prior to December 31, 2023, will incur an 8% tax, while post this date will face the full 15% rate.
The legislation extends its impact beyond individuals, encompassing “exclusive funds” (investment funds with a single shareholder) and foreign companies operating within Brazil’s financial landscape. The government aims to collect $4 billion (20.3 billion Brazilian reals) through these taxes in 2024.
Senator Rogério Marinho expressed dissent, critiquing the government’s decision to introduce this tax as a consequence of mismanagement.
This initiative to regulate and tax cryptocurrencies arrives at a time of burgeoning popularity for these digital assets in Brazil. Earlier, the governor of Banco Central do Brazil outlined plans to tighten regulations on cryptocurrencies, citing concerns about potential tax evasion.
The Brazilian central bank has gained authority over virtual asset service providers this year, while crypto-based securities fall under the regulation of Comissão de Valores Mobiliários, Brazil’s equivalent of the United States Securities and Exchange Commission.