Brazil’s Federal Tax Department Demands Taxes on Digital Currency Transactions

Brazil’s tax body, the Federal Revenue of Brazil (RFB), has passed a law that will require investors to pay personal income tax when exchanging one digital currency for another.

The statement was published in the Diário Oficial da União (Official Journal of the Union). The law clarifies that even when digital currency transactions do not involve the currency of Brazil or any other fiat currency, any profit derived from the transaction is taxable.

However, the law will not apply to all traders. The RFB caps the reporting requirement to transactions that exceed 35,000 reals (about $7,200). The RFB says the statement was made following consultations that began in 2021.

Significantly, the RFB, which falls under the Ministry of Economy, adopted the statement despite protests from a member of parliament. Kim Kataguiri (Podemos, or the National Labor Party) submitted an opinion to the National Assembly stating that he considered the taxman’s proposal to be illegal and unconstitutional.

Brazil has imposed tax reporting requirements on digital currency investors since 2016. In 2021, the Latin American country began considering making Bitcoin and other digital currencies legal tender.

In 2022, the Brazilian Senate approved a bill to regulate digital assets in the country. The bill, which now awaits presidential approval, will place digital currency oversight powers in the hands of the executive branch of government.

The Securities and Exchange Commission (CVM) has previously been identified as the body responsible for overseeing initial coin offerings (ICOs). Regulators for other aspects of the market have yet to be identified, but the bill paves the way for a concrete framework to be introduced.

There is speculation that plans to legalize the payment of workers’ wages in digital currencies that were proposed last year may continue after the bill is signed.

Sylvia B. Polson