Brazil’s Congress to Raise Taxes on Cryptocurrencies

Taxes on Cryptocurrency Investments Abroad

Brazilian legislators are making progress with legislation that plans to increase taxes on overseas cryptocurrencies. According to reports, a congressional committee has approved amendments to a bill that recognizes cryptocurrencies as “financial assets” for tax purposes in foreign investments.

The proposed law taxes gains from changes in crypto asset values against Brazil’s fiat currency, as well as foreign exchange rate fluctuations. Congressman Merlong Solano stated that this revision is intended to level the taxation of crypto investments abroad, which currently receive lower tax breaks.

Earnings up to 6,000 Brazilian reais (~$1,200) are exempt from taxation under the new rules. Earnings between 6,000 and 50,000 (~$10,000) are subject to a 15% tax rate. Above this threshold, taxes will be applied at 22.5%.

The changes outlined in the bill will only affect exchanges without offices in Brazil. This could make local exchanges a more cost-effective option for some investors, particularly those with gains above the top tax bracket. Additionally, the law could increase crypto exchange activity in the country and attract foreign players to establish offices in Brazil.

Crypto-Related Activities in Brazil

A number of global crypto exchanges, such as Binance, Coinbase, Bitso, Crypto.com, Mercado Bitcoin, and Foxbit, are currently operating in Brazil. On August 28th, the Brazilian Congress will vote on a bill that, if approved, will impose a new taxation starting in January 2024.

The nation has seen a rapid development of crypto-related activities in recent months. For example, the Brazilian central bank recently announced a rebranding of its central bank digital currency (CBDC), now called Drex. Additionally, the central bank is planning to introduce a tokenization system to increase businesses’ access to capital.

Polymesh Crypto, RGT Crypto, Rally Crypto, Propy Crypto, Revolut Crypto, QSP Crypto, and About Crypto are some of the crypto technologies that have been gaining traction in Brazil. Moreover, Polka Dot Crypto, Realm Crypto, and Web 3.0, also known as the decentralized web, are some of the other crypto technologies that have been making waves in the country.