Brazilian Senate Greenlights 15% Tax on Crypto Held Abroad

According to reports, the Brazilian Senate has given the nod to new income tax regulations that could impose a maximum tax rate of 15% on earnings from cryptocurrencies held on foreign exchanges. The bill, already approved by the Chamber of Deputies, awaits the anticipated sanction from President Luiz Inácio Lula da Silva, as these income tax modifications were initiated by his administration.

Effective from January 1, 2024, individuals in Brazil earning over $1,200 from foreign exchanges will be subject to this tax. The tax rate mirrors that applied to domestically held funds. Notably, funds accessed before December 31, 2023, will be taxed at 8%, while those accessed afterward will face the full 15% rate.

The legislation extends its impact to “exclusive funds,” referring to investment funds with a sole shareholder, and foreign companies operating within Brazil’s financial market. The government has set an ambitious revenue target of $4 billion for these taxes in 2024.

However, not everyone is on board with this move. Senator Rogério Marinho expressed dissent, criticizing the government for introducing a tax, citing concerns about poor management.

This regulatory shift aligns with Brazil’s tightening stance on cryptocurrencies, coinciding with their surging popularity. In September, the governor of the Banco Central do Brazil outlined plans to bolster cryptocurrency regulations, citing concerns related to potential tax evasion.

These tax regulations come as part of a broader strategy, with the Brazilian central bank gaining authority over virtual asset service providers earlier this year. Additionally, crypto-based securities fall under the regulation of the Comissão de Valores Mobiliários, Brazil’s equivalent of the United States Securities and Exchange Commission.