Brazil’s Congress moves to levy higher taxes on cryptocurrencies

Brazilian lawmakers are making progress with a new law aimed at increasing taxes on cryptocurrencies held overseas. Reports from the local scene indicate that a committee in Congress has given the green light to changes in a bill that designates cryptocurrencies as “financial assets” for taxation purposes when used in foreign investments.

The revised bill also introduces taxation on profits generated from fluctuations in the value of crypto assets against Brazil’s national currency, as well as changes in foreign exchange rates. Representative Merlong Solano explains that the goal of these revisions is to create a fairer tax system, as currently, overseas crypto investments benefit from lower tax rates.

Under the updated regulations, earnings from overseas transactions of up to 6,000 Brazilian reais (approximately $1,200) will be exempt from taxes. Earnings falling within the range of 6,000 to 50,000 reais (around $10,000) will be subject to a tax rate of 15%. For amounts above this range, a higher tax rate of 22.5% will be applied.

It’s important to note that these changes will only impact cryptocurrency exchanges that do not have a presence in Brazil. This alteration in regulations might lead some investors to consider local exchanges as a more economical option, particularly those who fall within the highest tax bracket. Legal experts also suggest that this law has the potential to stimulate more activity in the national cryptocurrency exchange market and attract foreign companies to establish offices within the country.

Several global crypto exchanges are already operating in Brazil, including major names like Binance, Coinbase, Bitso, and Crypto.com, alongside local platforms such as Mercado Bitcoin and Foxbit.

The Brazilian Congress is set to vote on this bill on August 28. If approved, the new tax regulations will come into effect from January 2024.

In recent times, Brazil has seen significant growth in activities related to cryptocurrencies. The country’s central bank recently revealed a rebranding of its central bank digital currency (CBDC), which is now known as Drex. Alongside the introduction of Drex, the central bank has plans to introduce a tokenization system that aims to enhance businesses’ access to capital.

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