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Brazil to implement new tax on foreign crypto earnings in 2024

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The Brazilian Senate has approved a new taxation policy, effective Jan. 1, imposing up to a 15% tax on earnings from crypto held in foreign exchanges.

The recent approval by the Brazilian Senate of new income tax regulations on crypto earnings marks a shift in the country’s financial landscape.

This new legislation, started by President Luiz Inácio Lula da Silva’s administration, has already passed by the Chamber of Deputies, and mandates a maximum 15% tax on cryptocurrency profits earned from foreign exchanges. Set to be effective once 2024 begins, this rule targets individuals earning over $1,200, or 6,000 Brazilian reals, from such platforms.

A big aspect of this regulation is its uniformity; the tax rate for foreign-held funds aligns with that for domestic funds. Notably, earnings withdrawn before the end of 2023 will be taxed at a reduced rate of 8%, increasing to 15% thereafter. The legislation also encompasses “exclusive funds” and foreign companies in Brazil’s financial sector, aiming to generate about $4 billion — 20.3 billion Brazilian reals — in revenue in 2024.

Senator Rogério Marinho has criticized the bill, attributing it to the government’s mismanagement rather than a structured financial strategy.

Concurrently, Brazil is witnessing an upsurge in cryptocurrency use, prompting regulatory tightening. In September, the governor of Banco Central do Brazil announced plans to enhance cryptocurrency regulations to prevent tax evasion. Earlier, the central bank gained authority over virtual asset service providers, paralleling the Comissão de Valores Mobiliários’ oversight of crypto-based securities.

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Author: Bralon Hill

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