The government of Brazil is advancing legislation that will increase taxes on cryptocurrency kept abroad. Local news sources claim that a legislative committee has accepted changes to a measure that would classify cryptocurrencies as “financial assets” for the purposes of taxation when used in international investments.
The proposed legislation also levies taxes on gains resulting from changes in the value of crypto assets relative to Brazilian real, as well as changes in exchange rates. Since crypto investments made abroad presently receive less favourable tax treatment, the change aims to encourage equal tax treatment, according to Deputy Merlong Solano.
Under the new regulations, foreign profits up to 6,000 Brazilian reals ($1,200) will not be subject to taxation. 15% of earnings between 6,000 and 50,000 reais (about $10,000) are taxed. Taxes will be charged at a rate of 22.5% over this limit.
The law states that only bitcoin exchanges without offices in Brazil will be affected by the amendments. According to legal experts, the new regulations may make local exchanges a more affordable choice for some investors, especially those with gains above the top tax level. Additionally, the regulation may encourage foreign companies to open offices in the nation and increase activity on crypto exchanges nationwide.
The nation is home to a number of international cryptocurrency exchanges, including Binance, Coinbase, Bitso, and Crypto.com, as well as domestic competitors like Mercado Bitcoin and Foxbit.
The bill will be put to a vote on August 28 in Brazil’s National Congress. The increased taxes would go into effect in January 2024 if they were approved.
Brazil has experienced a remarkable growth in recent months in crypto-related activity. Recently, the nation’s central bank stated that its digital currency, which is now named Drex, had undergone a rebranding. The central bank intends to create a tokenization mechanism as part of the Drex launch in order to increase corporate access to financing.