Brazil is reportedly weighing a tax on the use of cryptocurrencies for international payments as it moves to adopt a global tax reporting framework.
A Tuesday Reuters report.
During confidential talks, representatives of the country’s finance ministry reportedly expressed interest in expanding the Imposto Sobre Operações Financeiras (IOF) tax to include some digital asset-based transactions.
Also the Federal Revenue Service of Brazil announced Yesterday its reporting rules for crypto asset transactions act Dated November 14.
It will provide the tax department with access to citizens’ foreign crypto account data through the organization for economic cooperation and global reporting and data sharing standards. The move is not surprising, with the presence of Brazil signed A statement in favor of CARF by late 2023.
The move follows Monday’s report that the White House is reviewing the The Internal Revenue Service’s proposal to join Carf and the like Move by the Council of the European Unionthe collective body of EU27 finance ministers. In late September, the United Arab Emirates as well signed an agreement to join the data sharing program.
Related: Why Brazil is using Bitcoin as a Treasury asset and what other countries can learn
Brazil moves to close a crypto loophole
Cryptocurrencies are currently exempt from IOF tax; However, the gains in crypto capital are subject to a 17.5% flat tax. The IOF is a federal tax levied on financial transactions – mainly foreign exchange, credit, insurance and securities operations.
Two sources cited by Reuters said the move was aimed at closing a loophole while also boosting public revenue. The current exclusion of digital assets from the IOF is viewed as a loophole, since those assets-especially StableCoins-can be used as a de facto foreign-exchange or payment rail while skirting the taxes imposed in the traditional way to do so.
Officials said the rules aim to “ensure that the use of StableCoins does not create regulatory arbitrage vis-a-vis the traditional foreign-exchange market.”
Related: Brazilian solar firm Thopen considers bitcoin mining to absorb excess power
Brazil clamps down on crypto loopholes
The move coincides with Brazil’s central bank’s introduction this month of new rules that treat certain stablecoin and crypto wallet operations. as foreign exchange operations. The new rules expand existing consumer protection, transparency and anti-money laundering rules on crypto brokers, custodians and intermediaries.
In April, Brazilian judges were authorized to seize cryptocurrency assets From the debtors, close another loophole. “Although they are not legally tender, crypto assets can be used as a form of payment and as a store of value,” a translated version of the Superior Court of Justice Memo.
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