Brazil's Senate recently approved new income tax regulations that may mandate Brazilians to pay taxes of up to 15% on earnings derived from cryptocurrencies held on foreign exchanges. This legislation, which has already passed through the House of Representatives, awaits approval from President Luiz Inacio Lula da Silva. The government aims to revamp income tax rules, potentially affecting the taxation of overseas cryptocurrency holdings. This move comes as part of broader fiscal changes in the country.
Effective January 1, 2024, the bill mandates that any Brazilian individual earning more than $1,200 (BRL 6,000) from transactions outside Brazil will be subject to taxation. Essentially, income generated from these transactions will face taxation at the same rate as funds held within the country. For funds obtained by the owner before this date, the tax will be levied at the time of acquisition. However, income generated from funds acquired prior to December 31 will incur an 8% tax.
Moreover, the legislation extends its scope to cover "exclusive funds" (investment funds with a single shareholder) and foreign companies operating in Brazil's financial markets. This move is estimated to contribute to government revenues, with expectations to raise approximately $4 billion (BRL 20.3 billion) in 2024. Senator Rogério Marinho voiced opposition, attributing the taxation to governmental mismanagement.
In September, Brazilian Central Bank Governor Roberto Campos Neto disclosed plans to tighten cryptocurrency regulations due to their surging popularity in the country. He raised concerns about potential tax evasion through the use of cryptocurrencies. Notably, the country's central bank gained authority over virtual asset service providers in June, while the regulation of cryptocurrency-based securities is under the purview of the Comissão de Valores Mobiliários, akin to the U.S. Securities and Exchange Commission.
