New Tax Law’s Revenue Projection and Incentives for Early Compliance
The Brazilian government expects this new tax to generate approximately 20 billion reals ($4 billion) in revenue by 2024. To encourage early compliance, taxpayers who pay these taxes in 2023 will benefit from a reduced tax rate of 8% on all income earned until 2023. These taxes can be paid in installments starting in December. From 2024 onwards, the tax rate will increase to 15%. It’s important to note that overseas earnings up to 6,000 Brazilian reais ($1,200) are exempt from this tax.
João Carlos Almada, a controller at Brazilian stablecoin issuer Transfers, has emphasized the need for further clarification regarding certain aspects of the new law. He particularly highlighted the importance of provisions similar to those in place for stock assets, especially concerning compensation for losses. Almada cited Spain’s Tax Administration Agency, which reminded its citizens of their obligation to declare overseas-held cryptocurrencies, specifically targeting individuals with digital assets exceeding 50,000 euros (about $55,000).
Brazil’s decision to tax crypto assets abroad aligns with a growing global trend where countries increasingly acknowledge and regulate cryptocurrencies within their financial systems. This development signals a broader acceptance of digital currencies and reflects governments’ efforts to ensure that these assets contribute to the national economy through taxation. The implementation of this new tax law on overseas crypto assets marks a significant milestone in Brazil’s approach to digital currencies. It may lead to a more stable and credible crypto environment, potentially attracting cautious investors who have been deterred by the lack of regulatory clarity.