Brazil Seeks to Impose a Heavy Tax on Crypto
- New amendments to a bill have been proposed by lawmakers in Brazil to impose a higher tax on crypto.
- Crypto earnings up to $1,200 will remain non-taxable, while those between $1,200 and $10,000 will be taxed at 15%.
- People earning above this threshold will have to pay 22.5% in taxes.
- The law is applicable to exchanges without an office in Brazil, making local exchanges a better option for investors.
The lawmakers in Brazil seek to impose heavy taxes on cryptocurrencies, which might affect the number of investors in the digital asset sector considering the huge decline in the price of multiple altcoins and Bitcoin since the 2021 crypto market bull run. As per local reports, a congressional committee has approved amendments to a bill that now classifies digital assets as “financial assets” for tax purposes in foreign investments.
It is crucial to note that, as per local reports, the amendments will now enable authorities in Brazil to tax gains from fluctuations in the prices of digital assets against the country’s fiat currency, as well as foreign exchange rate fluctuations. Additionally, Congressman Merlong Solano pointed out that the goal of the amendments is to promote equal tax treatment because cryptocurrency investments abroad currently receive lower tax breaks.
As per the new rules, the investment in cryptocurrency by people in Brazil will remain non-taxable up to 6,000 Brazilian reais (~$1,200). On the other hand, people who earn between 6,000 and 50,000 reals (~$10,000) will be subjected to a 15% tax rate, while those earning above this limit will have to pay 22.5% in taxes.
On the other hand, the new legislation states that these charges will only be applicable to those crypto exchanges that do not have offices in Brazil, which would make local crypto trading platforms more affordable for investors in the region. Legal experts believe that those who fall into the category of gains above the top tax bracket will benefit the most from investing in local crypto exchanges.
More importantly, the amendments could attract more crypto exchanges to establish their offices in Brazil and also promote native investment in digital assets via local crypto exchanges. The top crypto exchanges in the country include Binance, Coinbase, Bitso, and Crypto.com, as well as local players such as Mercado Bitcoin and Foxbit.
The Brazilian Congress is expected to put the amendments to vote on August 28, and if approved, the new policies will become law starting in January 2024. As per an earlier report from BitcoinWisdom, in December 2022, Brazil welcomed a new president, Jair Bolsonaro, who officially signed a bill regulating the digital asset sector in the country.
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
