Brazil’s tax authority is reportedly preparing to gather information from foreign cryptocurrency exchanges to understand their operations in the country and ensure compliance with the new tax laws. The Receita Federal do Brasil (Federal Revenue of Brazil) is set to issue an ordinance calling on these companies to provide more details later this week, as per a report from Reuters on June 18.
“It’s crucial for us to grasp how these exchanges function here and determine if any illegal activities are taking place,” stated Andrea Chaves, Deputy Secretary of Inspection at DFR, in an interview with Reuters. So far, only local cryptocurrency exchanges have been required to report transactions on their platforms.
Brazil implemented a law last December mandating a 15% income tax on cryptocurrency profits and dividends earned on foreign exchanges. The tax authority aims to collect approximately $4 billion (20 billion Brazilian reals) in the 2024 fiscal year.
Popular crypto exchanges in Brazil, such as Binance, Mercado Bitcoin, and Bitso, hold significant market share. Binance, which currently accounts for 79% of all transactions, has faced competition from Mercado Bitcoin and Bitso in recent times.
In the first few months of 2024, Brazil experienced a 30% increase in cryptocurrency trading activity, reaching $6 billion between January and May. A Kaiko report highlighted Brazil as the largest market player in Latin America and the seventh-largest globally in terms of fiat currency trade. Stablecoin transfers continue to drive cryptocurrency activity in Brazil.
Overall, the cryptocurrency landscape in Brazil is evolving rapidly, with the tax authority taking steps to ensure compliance and transparency in the market.