Brazil’s tax authority is reportedly planning to seek information from foreign crypto exchanges to find out how they operate in the country and whether its citizens are complying with the country’s new tax laws or not.
The Federal Revenue of Brazil is publishing an ordinance this week to look for any potential “illegality” and info on what Brazilians may be owing in tax.
The Receita Federal do Brasil (Federal Revenue of Brazil) is expected to publish an ordinance summoning these firms for further information later this week, according to a June 18 report from Reuters citing comments from Brazilian officials.
“It’s an area of concern for us to understand first how they operate here, whether there’s any illegality or not,” Andrea Chaves, DFR’s Deputy Secretary of Inspection told Reuters.
“We are also concerned about having information on Brazilian wealth subject to taxation.”
Up until now, only local cryptocurrency exchanges have been obligated to report transactions conducted on their trading platforms.
Last December, Brazil passed a law mandating Brazilians to pay a 15% income tax on cryptocurrency profits and dividends earned on foreign exchanges.
The Brazilian tax authority intends to collect around $4 billion (20 billion Brazilian reals) in the 2024 financial year.
Binance, Coinbase, OKX and KuCoin are among the notable trading platforms operating in the country.
Binance currently holds the largest market share in Brazil, accounting for 79% of all transactions — though it has lost some of its dominance to Brazil’s Mercado Bitcoin and Mexico-based Bitso in recent months.
Meanwhile, Brazil saw a spike in cryptocurrency trading activity in the first few months of 2024, increasing 30% year-on-year to $6 billion between January and May.
Breakdown of Brazilian real trading pairs by cryptocurrency between May 2020 and May 2024. Source: Kaiko Research
A recent Kaiko report revealed that it is the largest market player in Latin America and the seventh-largest worldwide in terms of fiat currency trade.
Stablecoin transfers remain the main source of cryptocurrency activity in Brazil.
