Federal lawmaker Merlong Solano said a local congressional committee approved amendments to a bill that would allow cryptocurrencies to be considered foreign financial assets. According to the document, profit from fluctuations in the exchange rate of crypto-assets against the state currency will be taxed. Solano said the amendments are aimed at “equalizing the tax treatment” because investing in cryptocurrencies implies tax benefits.
Cryptocurrencies held by Brazilians abroad will be subject to the same tax rules as traditional foreign assets. Under the new rules, overseas cryptocurrency earnings up to 6,000 Brazilian reals (about $1200) will not be taxed. Income between R$6,000 and R$50,000 ($1200 to $10,000) will be taxed at a 15% rate. Above this threshold the tax rate will be 22.5%.
The changes will only affect cryptocurrency exchanges that do not have offices in Brazil. Lawyers are confident that the new rules will make it more profitable for investors to use the services of local trading platforms. Especially those whose cryptocurrency revenues are above the upper threshold. In addition, the law may attract foreign players to open cryptocurrency companies in Brazil. International crypto exchanges Binance, Coinbase, Bitso and Crypto.com are now operating in the country, as well as local marketplaces Mercado Bitcoin and Foxbit. The National Congress will vote on the bill on August 28. If approved the new law would take effect in January 2024.
In June, Brazil’s Central Bank became the regulator of the cryptocurrency industry, gaining the power to issue licenses to companies dealing with digital assets. In May, Latam Gateway, an operator of Brazil’s largest crypto exchange Binance, had already received a license from the local regulator to operate as a payment provider.