Brazilian parliament is armed against “flawed” cryptocurrency tax system

The interim measures issued by the Brazilian government to impose a flat rate on cryptocurrency income are being contested in Parliament. Some believe that it could go beyond the jurisdiction of enforcement on tax matters and thereby bypass the agency’s duties.

Flat cryptocurrency tax order contested in Brazilian parliament

Cryptocurrency taxation is becoming a hot topic in Brazil, where it has become a central component of legislative warfare in parliament. The Deputy Bureau of Gustavo Gaier, a party opposing the Lula coalition, has introduced a legal project that rolls back changes made by President Lula’s government in crypto taxation, under the premise of illegality.

The project is a legislative project that suspends normative conduct in the administrative sector, seeking to invalidate the termination of the tax exemption for small cryptocurrency holders enacted at a provisional measurement of 1,303. This measure establishes a flat rate of 17.5% as income tax for all crypto holders without exception.

Gaier argues that the executive branch exaggerates jurisdiction in this order, as Congress is the only organisation that can change taxes.

The project evaluates that the Brazilian constitution also limits the authority of executives to issue interim measures, and “in addition to limiting it to situations of relevance and urgency, they require that they do not involve the creation of taxes without legitimate legislative permission.”

Gayer also emphasizes that this new taxation scheme adds unnecessary clutter to the new industry that should be studied in nuances. “Regulation of emerging markets such as digital currencies requires a more detailed analysis of their fiscal, economic and social impacts and approval through regular legislative processes with stakeholder participation.

The newly proposed tax system has been criticized by some members of Brazil’s crypto industry, and believes it can block participation and push users towards foreign and decentralized alternatives.

The Brazilian Parliament must assess the validity of this measure and approve or reject its implementation the following day.

Read more: Brazilian authorities end exemption and aim for self-subordination crypto tax