Brazil Approves New Tax Rules for Cryptocurrency Income
Brazilians may soon be required to pay up to 15% tax on income derived from cryptocurrencies held on exchanges outside the country, after new income tax rules were approved by the Brazil Senate on Nov. 29.
Under the bill, any Brazilian who earns more than $1,200 (6,000 Brazilian reals) on exchanges based outside Brazil would be subject to the tax, effective Jan. 1, 2024. The change makes those funds taxable at the same rate as funds held domestically. Funds earned before that date would be taxed when accessed by the owner, meanwhile, earnings on funds accessed before Dec. 31 will be taxed at 8%.
Impact on Exclusive Funds and Foreign Companies
The bill also affects “exclusive funds” — investment funds with a single shareholder — and foreign companies active on the Brazilian financial market. The government hopes to raise $4 billion (20.3 billion Brazilian reals) in 2024. Senator Rogério Marinho voiced his opposition to the bill. He said:
“The government is creating a tax because it is a poor manager.”
Hot Take: Controversy Surrounding New Tax Rules in Brazil
The approval of new income tax rules in Brazil has sparked controversy among crypto enthusiasts. While the government aims to generate revenue and regulate cryptocurrency transactions, critics argue that this move unfairly targets individuals and companies involved in the crypto market. Some believe that imposing taxes on cryptocurrency earnings is a sign of poor governance and mismanagement by the government. It remains to be seen how these new tax rules will impact the adoption and growth of cryptocurrencies in Brazil.
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