Brazil Set to Implement 15% Tax on Overseas Cryptocurrency Income from 2024
Summary:
Brazil's Senate has approved new income tax rules that may levy up to a 15% tax on income from cryptocurrencies held on foreign exchanges. Set to take effect from January 1, 2024, this legislation will also impact "exclusive funds" and international businesses active in Brazil's financial market. The government expects to generate $4 billion in 2024 from these changes, with critics claiming these new taxes emerge from poor government management.
A proposed increase in taxes to 15% on revenue garnered from overseas-hosted cryptocurrencies is due to be introduced in Brazil, as new tax regulations were adopted by the nation's senate on the 29th of November. The tax bill has successfully passed within the Deputies Chamber and is predicted to gain approval from President Luiz Inácio Lula da Silva, who first launched the alteration to the tax laws, as communicated by Cointelegraph Brazil.
From January 1, 2024, the legislation states that any Brazilian generating over $1,200 (equivalent to 6,000 Brazilian reals) from offshore exchanges will be liable to pay this tax. The tax change will treat overseas funds in the same way as local ones. Income earned pre-January 1, 2024 will be taxed on withdrawal by the holder, while those withdrawn before December 31 will encounter an 8% tax.
Significantly, this is not taxing Brazilians regardless of where they reside. PL 4173/2023 brings about the following changes: Current situation: Deferred Tax. Should you hold an offshore company or trust as a tax resident in Brazil, you are taxed only when profits are distrusted.
The new legislation will also impact "exclusive funds," which are investment funds owned solely by one investor, and international corporations that are operational within Brazil's financial ecosystem. The Government anticipates a generation of $4 billion (20.3 billion Brazilian reals) in 2024 through these policies. One of the bill's critics is Senator Rogério Marinho, who expressed that this new tax is a result of poor governmental management.
Roberto Campos Neto, the governor of the Banco Central do Brazil disclosed his intentions in September to regulate cryptocurrency following its surge of attraction in the country. At the time, he expressed suspicions that cryptocurrencies were being exploited to avoid taxes. In June, Brazil's central bank was granted control over virtual asset service providers. The Comissão de Valores Mobiliários – Brazil's parallel to the United States Securities and Exchange Commission – regulates cryptocurrency securities.
Published At
11/30/2023 12:20:00 AM
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