- Brazil is about to shift its cryptocurrency taxation practices in a proposed bill under the National Congress.
- The new tax rules will depart from the categorization of crypto as goods and will instead treat them like stocks and other securities.
Crypto Taxation Proposal in Brazil’s National Congress
According to Valor, the bill that will be presented in Congress in a few days proposes a 15% levy for investors based on the income they earned from the operations of their cryptocurrency holdings. This will overhaul the existing practice of collecting capital gains tax in relation to the volumes traded.
The present tax regime of Brazil for digital assets covers trades involving cryptocurrency and non-fungible tokens (NFT). In this regulatory framework, transaction volumes below 5 million reais (approximately $990,000) are subject to 15% tax. It can go up to 22.5% for those exceeding 30 million reais (around $6 million).
Investors trading above 35,000 reais (roughly $7,000) are affected by these guidelines. This is notably 15,000 reais higher than the baseline for trading stocks, which currently sits at 20,000 reais (about $4,000). It remains unclear whether or not the proposed legislation will adjust these limits to provide exemptions for traders handling smaller crypto denominations.
The target for enforcement of the new crypto taxation law is eyed for 2025. Bitcoin.com reported that it’s part of the Brazilian government’s efforts to gain broader supervision on cryptocurrency transactions and potentially curb tax evasion and illegal activities in the digital assets industry after it found 25,000 anomalous crypto tax declarations in February using manual and AI-based analytics tools.
Crypto Adoption in Brazil
Brazil is one of the top crypto adopters in the world. Overall, it ranked ninth out of the 146 countries studied by Statista in 2023. The highest it got in the ranking was in 2022 as it landed in the seventh. It found that Brazilians most commonly used cryptos for peer-to-peer (P2P) exchange, ranking 15th out of 146 countries in this metric.
Meanwhile, a Federal Revenue Service (FRB) data from last year revealed that 3.2 million Brazilians, or more than 89,000 registered entities in the South American nation, had exposure to or had engaged in crypto-related operations.
It’s worth mentioning as well that Brazil hosts three tourist sites that accept Bitcoin (BTC) as a mode of payment. CryptoSlate identified the municipality of São Thomé das Letras, the beach town of Jericoacoara, and the municipality of Rolante as among the areas in the nation with the most number of merchants that accept the digital asset as payment for goods and services.