Brazilian President Luis Inácio Lula da Silva has officially approved a new law that focuses on taxing cryptocurrency assets held abroad by Brazilian citizens. Set to be effective January 1, 2024, this legislation represents a significant step in the country’s regulatory stance on cryptocurrencies.
Under this law, Brazilian citizens will be liable for up to a 15% tax on profits arising from cryptocurrencies held overseas. However, those commencing tax payments this year will enjoy a reduced rate of 8% on all income generated until 2023, with payments scheduled in installments starting in December 2023. From the following year, the tax rate will increase to 15%, but overseas earnings below $1,200 will remain exempt.
The law’s scope goes beyond cryptocurrencies, enabling the government to tax profits and dividends from various investment funds, platforms, real estate, or trusts. This comprehensive approach aims to generate around $4 billion in new taxes for the Brazilian government in 2024.
The impact of the law extends not only to individual holders but also includes exclusive funds (investment funds with a single shareholder) and foreign companies active in the Brazilian financial market, broadening its influence within the financial sector.
This enactment of a tax law aligns with Brazil’s broader efforts to enhance cryptocurrency regulations, as indicated by Roberto Campos Neto, the Brazilian central bank governor, in September. The move reflects a global trend where governments are increasingly inclined to regulate and tax cryptocurrency assets, navigating the balance between fostering innovation in digital finance and meeting fiscal policy and market stability requirements.
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