Legislators in Brazil are progressing a proposal to increase taxes on cryptocurrencies held abroad. Reports indicate that a congressional committee has endorsed modifications to a bill categorizing cryptocurrencies as “financial assets” for taxation purposes in overseas investments.
Furthermore, the proposed legislation levies taxes on gains from fluctuations in crypto asset values against Brazil’s fiat currency, along with foreign exchange rate fluctuations. Deputy Merlong Solano explains that the revision intends to establish equitable tax treatment, as foreign crypto investments currently enjoy reduced tax advantages.
The forthcoming rules will exempt overseas earnings up to 6,000 Brazilian reais (~$1,200) from taxation. Earnings ranging from 6,000 to 50,000 reais (~$10,000) will incur a 15% tax rate, while earnings surpassing this threshold will be subject to a 22.5% tax rate.
The legislation specifies that these changes will impact cryptocurrency exchanges without offices in Brazil. Experts suggest that this could make local exchanges more cost-effective for investors, especially those with gains exceeding the highest tax bracket. The new law might also stimulate cryptocurrency exchange activity nationally and encourage foreign players to establish offices within the country.
Brazil’s National Congress is set to vote on the bill on August 28. If approved, the revised taxation structure will come into effect in January 2024. In another news, SEC goes after Richard Heart and his projects Hex,
Recent months have seen a rapid expansion of cryptocurrency-related activities in Brazil. The country’s central bank unveiled a rebranded central bank digital currency named Drex. With the launch of Drex, the central bank aims to introduce a tokenization system to enhance business access to capital.