Under the newly introduced Crypto tax rule, all citizens are required to pay 15% taxes on the profit generated from the crypto investment ot foreign crypto exchanges.
Crypto trading is fully legal in Brazil under the country’s crypto dedicated regulation framework which was introduced in late 2022 by the Brazilian Congress. Currently, all the crypto traders are paying an 8% tax against the crypto investment profit.
On 29 Nov 2023, A new income tax rule was approved by the Federal Senate of Brazil. That new tax rule includes some new measures for crypto traders.
Under new tax rules, all the crypto traders who are investing their money on foreign crypto exchanges will be required to pay 15% tax over the gain, which is nearly double what people are already paying.
This new rule will come into effect from 1 Jan 2024 and after that, Brazilians who are trading on non-Brazilian crypto platforms will forced to pay a 15% tax against the crypto investment profit, while all the activities will be subject to only 8% tax before 1 Jan 2024.
This new income tax rule is a big issue for foreign crypto companies because it will badly affect “exclusive funds” — investment funds with a single shareholder — and foreign companies active on the Brazilian financial market.
The majority of the Brazilian crypto traders will stop crypto trading activities across foreign crypto exchanges and will shift to local crypto platforms, to remain away from high tax rules.
In short, we can say that it is going to be a very big problem for the foreign crypto companies which have already invested huge amounts of money in the Brazilian sector but now at this verge, they have only option to quit the Brazilian market as they can’t generate profitable amounts of revenue from this market.
Some experts shared their opinion on this matter and said that it is a very bad move by the Brazilian government because it will allow the local companies to create a monopoly and in that situation, citizens will not get highly enhanced service in the absence of competition among companies.
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