Brazil has abolished the long-standing tax exemption on cryptocurrency profits, equipped with a new interim measure (MP 1303), and has a tax of 17.5% on all cryptocurrency profits for individuals.
Previously, individuals selling codes worth up to $35,000 (approximately $6,300) per month were exempt from tax. Before the change, the above profits were gradually taxed, reaching 22.5% in amounts above $5.4 million.
The new rules replace this system with flat tax. That means small investors face higher tax burdens, while larger holders may see their bills shrink, local news outlet portals report Bitcoin.
Taxes apply regardless of where the assets are held, including overseas exchanges and independent wallets. The losses could be offset, but only under a fifth of the windows, the rule will become more stringent from 2026.
The government says the overhaul is intended to increase tax revenue after walking the proposed hike of the IOF Financial Transactions Tax, which elicited criticism from industry and parliament.
Alongside encryption, the new measure affects fixed income investments and online bets, with the former currently receiving a fixed 5% tax on revenues, and the latter increasing tax on operator revenues from 12% to 18%.
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