Amidst the astonishing move, Brazil has made a major change in its crypto tax policy. Under interim measure No. 1303, all crypto investors are subject to a 17.5% tax on profits.
Under the previous tax system, small traders were exempt, while larger traders paid up to 22% in annual profits. This controversial tax will ease the burden on rich investors.
Brazil’s new crypto tax rules will benefit the rich
Brazil has made several major crypto-friendly policy decisions over the past few months. For example, we launched the world’s first XRP ETF in April, and this month we have considered investing quite a bit of Bitcoin. This is in addition to other public-private partnerships.
In this context, Brazil’s attempts to overhaul crypto tax policy have turned a few heads.
According to local media reports, Brazil’s new crypto tax rules include some major changes.
In the previous system, investors were exempt from taxes until profits reached the R$35,000 ($6,298 USD) threshold. If they reach this income level, they will pay a 15% tax rate until the profit reaches $900,000.
However, the new system will charge a 17.5% tax rate on all Brazilian crypto investors. This means smaller investors pay more, while some larger investors may pay less than before.
In other words, the model directly encourages local elites to control the country’s crypto trade, putting ordinary investors at a disadvantage.
Furthermore, the move appears to be even more odd compared to other proposed taxes from Brazil. Two days ago, lawmakers proposed a bill with new restrictions on Bitcoin mining, including stricter licensing and higher taxes on daily operations.
Interim measure No. 1303 was proposed by the Brazilian Finance Minister on behalf of lawmakers, both of which come from the same party. Why would it lower the tax rate for the rich if Brazil was trying to crack down on the code?
Why crack down on miners if you are trying to encourage crypto investment? Of course, this law may not pass, but it could reveal internal policy disputes.
In any case, local media argue that these crypto taxes are an effort to improve other financial debates in Brazil. The government has imposed a rate of 17.5% on similar types of investments and removed exemptions from assets like bonds.
Taxes on gambling facilities also increased by 6%.
For now, it is difficult to predict how these taxes will affect Brazil. If these policies contradict government attempts to attract crypto investment, other solutions can be tried.
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