Brazil is gearing up to introduce a significant shift in its cryptocurrency taxation policy with a new bill poised for submission to the National Congress. This legislative proposal aims to align the taxation of cryptocurrencies with that of shares and capital instruments that feature variable exchange rates, marking a departure from the current classification of cryptocurrencies as goods.
A Closer Look at the Proposed Tax Scheme
Under the new bill, cryptocurrency investors will be subject to a 15% tax on income derived from their crypto operations. This represents a change from the existing tax structure, where gains from cryptocurrency are taxed based on transaction volumes, starting at 15% for transactions under 5 million reais (approximately $990,000). The tax rate escalates to 22.5% for transactions exceeding 30 million reais (around $6 million), with intermediate volumes attracting lower rates.
The proposed changes extend to non-fungible tokens (NFTs), affecting investors who conduct transactions exceeding 35,000 reais (nearly $7,000) monthly across all registered platforms. This threshold contrasts with the lower limit currently applied to stock transactions, set at 20,000 reais (about $4,000). It remains to be seen whether the new legislation will adjust these thresholds to exempt small-scale crypto traders from tax obligations.
Implications and Timeline for Implementation
Scheduled for implementation in 2025, the bill’s enactment would streamline Brazil’s approach to crypto taxation, offering clarity and consistency for investors. However, its passage through Congress is still pending, following over a year of development.
Broader Context of Crypto Regulation in Brazil
The proposed tax regime is part of Brazil’s broader efforts to enhance oversight of the cryptocurrency market. In February, the Brazilian crypto tax authority unveiled irregularities in over 25,000 cryptocurrency tax statements, employing a combination of traditional and artificial intelligence techniques to detect discrepancies. This move underscores the government’s commitment to regulating the crypto space more effectively.
