Brazil Introduces 15% Tax on Offshore Crypto Earnings

Jimmy Aki
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Brazil is set to implement a new 15% tax policy for all income generated from cryptocurrencies held on exchanges outside the country’s region. This recent regulation aligns with the global trend where countries are actively working to establish an effective and transparent tax framework for their residents.

New Tax Policy Targets Residents’ Earnings Over $1,200 From Foreign Exchange

The Brazilian Senate and Chamber of Deputies approved a tax legislation on November 29, which entailed the imposition of an income tax on profits generated from cryptocurrencies traded on offshore exchanges.

However, the legislation is pending final approval from the country’s president, Luiz Inácio Lula da Silva. Once the president gives the go-ahead, the proposal is scheduled for potential implementation on January 1, 2024.

According to a report from Cointelegraph, the bill will impose a 15% levy, targeting residents earning over 6,000 Brazilian reals ($1,200) from foreign exchanges and investment funds with a single shareholder.

However, funds will only be subject to taxation when the owner decides to access or withdraw them. Additionally, any extra earnings generated from these funds before December 31 will face an 8% tax rate.

The anticipated revenue from Brazil’s proposed tax reform is substantial, with the government aiming to generate $4 billion in the upcoming year by taxing cryptocurrency gains from offshore exchanges.

Despite the potential financial benefits, the legislation has faced criticism. Brazilian Senator Rogerio Marinho has expressed dissent, suggesting that the introduction of this tax results from poor management by the government.

His criticism implies that fiscal challenges or financial mismanagement may drive the government’s decision to tax crypto gains.

International Push for Tax Rule Gaining Momentum

Thailand initiated a significant shift similar to Brazil’s proposed rule. Historically considered crypto-friendly, the Asian-based country plans to impose taxes on foreign income derived from cryptocurrency trading.

On September 19, the Thai Revenue Department disclosed to local media, Bangkok Post, its intention to address citizens generating income overseas to evade taxes through a new tax policy.

This fresh rule targets specific groups, including residents trading foreign stocks via international brokerages and crypto asset traders. Set to be enforced on January 1, 2024, the rule will empower authorities to tax individuals’ foreign income starting in 2025.

Meanwhile, the United Kingdom government has taken a proactive stance against international crypto tax violators. On November 10, it collaborated with 48 countries to combat offshore crypto tax evasion through the Crypto-Asset Reporting Framework (CARF).

This framework mandates global exchanges to share taxpayer information with tax authorities and is slated to take effect in 2027.

Additionally, the UK government released Tax Guidance on November 29, encouraging all residents to voluntarily report incomes or gains generated from crypto assets such as Bitcoin, non-fungible tokens (NFTs), and utility tokens.

These recent developments signify a broader collaborative effort to bring cryptocurrency transactions into regulatory frameworks. The objective is to ensure tax transparency and compliance while motivating residents to adhere to established policies.

About Jimmy Aki PRO INVESTOR

Based in the UK, Jimmy is an economic researcher with outstanding hands-on and heads-on experience in Macroeconomic finance analysis, forecasting and planning. He has honed his skills having worked cross-continental as a finance analyst, which gives him inter-cultural experience. He currently has a strong passion for regulation and macroeconomic trends as it allows him peek under the global bonnet to see how the world works.