Brazil's legislative body is making strides towards implementing a law that would increase taxes on cryptocurrencies stored abroad, according to Cointelegraph. A committee within the congress has given the green light to adjustments in a bill that categorizes cryptocurrencies as "financial assets" for tax purposes related to foreign investments, the report added.
The proposed law would impose taxes on gains resulting from fluctuations in cryptocurrency values compared to Brazil's official currency and foreign exchange rates.
Under this new legislation, crypto assets owned by Brazilians abroad would follow the same tax regulations as conventional assets. This change could make local cryptocurrency exchanges more attractive for certain investors, particularly those with profits exceeding the highest tax bracket. The updated regulations grant a tax exemption for earnings up to 6,000 Brazilian reais (about $1,200), a 15% tax rate for earnings between 6,000 and 50,000 reais (about $10,000), and a 22.5% tax rate for earnings beyond that.
Congressman Merlong Solano stated that the changes are intended to make sure that taxes are fair for everyone, as right now, people who invest in crypto from other countries get better tax benefits.
Notably, the rules apply exclusively to cryptocurrency exchanges without a presence in Brazil. Legal professionals suggest that this adjustment has the potential to lead to more cryptocurrency trading within Brazil and encourage international entities like Binance, Coinbase, Bitso, and Crypto.com, as well as local players such as Mercado Bitcoin and Foxbit, to establish local operations.
Brazil's Congress will make a decision about this bill on August 28th. If it's accepted, the new tax rules will start from January 2024.
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