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Brazil’s tax authority, Receita Federal do Brasil (Federal Revenue of Brazil), is reportedly preparing to request information from foreign cryptocurrency exchanges to assess their operations within the country and ensure compliance with new tax regulations.
According to a June 18 report from Reuters, Brazilian officials indicated that an ordinance summoning these firms for further information is expected to be published later this week.
Andrea Chaves, Deputy Secretary of Inspection at the DFR, told Reuters, “It’s an area of concern for us to understand first how they operate here, whether there’s any illegality or not. We are also concerned about having information on Brazilian wealth subject to taxation.”
Currently, only local cryptocurrency exchanges are required to report transactions conducted on their platforms. However, with the new ordinance, foreign exchanges will also need to comply with Brazil’s tax laws.
In December, Brazil enacted legislation requiring citizens to pay a 15% income tax on cryptocurrency profits and dividends earned on foreign exchanges. The Brazilian tax authority aims to collect approximately $4 billion (20 billion Brazilian reals) in the 2024 financial year.
Prominent crypto exchanges operating in Brazil include Binance, Coinbase, OKX, and KuCoin. Binance holds the largest market share in the country, accounting for 79% of all transactions, although it has recently lost some dominance to Brazil’s Mercado Bitcoin and Mexico-based Bitso.
Brazil experienced a 30% year-on-year increase in cryptocurrency trading activity in the first few months of 2024, with transactions totaling $6 billion between January and May.
A recent report by Kaiko Research revealed that Brazil is the largest cryptocurrency market in Latin America and the seventh-largest worldwide in terms of fiat currency trade. Stablecoin transfers remain the primary source of cryptocurrency activity in the country.
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