Brazil is making great strides in the cryptocurrency space, with recent legislative changes expected to have a significant impact on local and international cryptocurrency stakeholders, with new tax guidelines awaiting approval.
New cryptocurrency tax framework launched
Brazil’s legislature is making progress on a key tax bill targeting cryptocurrencies held abroad. Local sources revealed that a specialized congressional committee has approved amendments. These would classify cryptocurrencies as “financial assets” for tax purposes of foreign investment.
The upcoming legislation will tax the profit margin resulting from changes in the valuation of crypto assets, based on the Brazilian official currency. It also extends to changes in exchange rates abroad. As Congressman Merlong Solano has articulated, the amendments are committed to creating tax equality. Historically, offshore cryptocurrency investments have enjoyed significant tax advantages.
Under the proposed framework, foreign income below 6,000 Brazilian reals (about 1,200 U.S. dollars) would be tax-exempt.
· Income between 6,000 and 50,000 reais (about 10,000 USD) will be taxed at 15%.
Income above this range will be taxed at 22.5%.
Impact on cryptocurrency exchanges
The legislative adjustment is limited to cryptocurrency exchanges operating outside of Brazil and without any local foothold. As legal experts point out, this evolution could make Brazilian exchanges a more economical option, especially for investors who are subject to the highest tax rates. In addition, this shift could revitalize national cryptocurrency trading activities and attract international competitors to establish bases in Brazil.
Global cryptocurrency giants Binance, Coinbase, Bitso and Crypto.com have already set foot in Brazil, operating alongside domestic leaders such as Mercado Bitcoin and Foxbit.
Expected rollout and legislative decisions
Brazil’s Congress is preparing for a decisive vote on the legislation on August 28. If the bill is approved, the revised tax framework is expected to debut in January 2024.
Brazil has been in the midst of a wave of cryptocurrency-centric innovation lately. The country’s central bank made a major announcement, renaming its central bank digital currency (CBDC) to “Drex.” Alongside Drex’s inauguration, the bank aims to launch a tokenization mechanism to broaden capital business channels.
At a time when digital assets are reshaping the global economy, Brazil’s proactive legislative approach underscores its commitment to keeping pace with the times and ensuring a sound and fair financial landscape. #巴西 #加密货币
