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Brazilian Tax: 25,000 Traders Ignore Reporting Bitcoin Investments

The Brazilian Tax Authority (RFB) has uncovered irregularities in over 25,000 tax returns that failed to report Bitcoin assets, prompting officials to issue warnings of penalties for concealing income. This investigation was facilitated with the use of artificial intelligence, which uncovered that 25,126 individuals who owned at least 0.05 BTC each did not include this cryptocurrency in their tax returns. The RFB estimates that a minimum of 1.06 billion reais (approximately $213 million) worth of undeclared cryptocurrencies were uncovered.

The tax authority received a total of 237,369 tax reports from Brazilian residents with registered investments in Bitcoin, along with 181 applications submitted by citizens residing abroad. In light of these findings, parliamentary discussions began towards the end of last year concerning a bill on the taxation of foreign crypto assets.

RFB has issued a warning, conveying that Brazilian citizens could face imprisonment for a period ranging from six months to two years, in addition to significant fines if they refuse to declare their cryptocurrencies. Tax lawyer and partner at RMS Advogados, Leonardo Roesler, expressed concern over the situation, stating that the incorrect declaration of cryptocurrencies may be viewed as a crime against the tax system.

In August, Brazilian lawmakers proposed an increase in taxes on income derived from foreign-issued cryptocurrencies, aimed at encouraging traders to utilize local trading platforms.