Brazil To Impose 15% Tax On Cryptocurrencies

The Brazilian Senate approves new income tax legislation that imposes a 15% tax on cryptocurrency profits received from overseas exchanges. The measure is awaiting President Luiz Inacio Lula da Silva's approval after having already been adopted by the Chamber of Deputies.

The tax, which will resemble the domestic tax rate, will take effect on January 1, 2024, and it will be applied to earnings from foreign exchanges that surpass $1,200. Before December 31, 2023, funds accessible will be subject to an 8% tax; after that date, the full 15% tax will apply.

The law also affects international companies operating in Brazil's financial sector and "exclusive funds." By 2024, the government hopes to have raised $4 billion from these levies. Senator Rogério Marinho faults the bill's weak management of the government.

This regulatory action is in line with Brazil's growing interest in cryptocurrencies. The governor of Banco Central do Brazil expressed concerns about possible tax avoidance in September and advocated stricter restrictions pertaining to cryptocurrencies.

This year, the central bank was given control over virtual asset service providers, and crypto-based securities are governed by Brazil's SEC-like Comissão de Valores Mobiliários (CVM).

This tax on foreign-held cryptocurrency is an important step toward regulating the rapidly developing digital asset market in Brazil, as the country attempts to bring cryptocurrencies under its fiscal jurisdiction.

Brazil's blockchain and cryptocurrency endeavors have advanced significantly. Brazil's Central Bank gave the country's cryptocurrency behemoth, Mercado, the go-ahead to open a digital bank earlier this year.

This step aided in the nation's integration of traditional and cryptocurrency finance.

Revolut has also made crypto-forward movements within Brazil's borders by launching its forex and cryptocurrency services. Furthermore, through its financial behemoth BTG Pactual, Brazil is still working on developing its own US dollar stablecoin.