Brazil’s Special Department of Federal Revenue has recently announced plans to collect information from foreign crypto exchanges to ensure compliance with local regulations. The tax department’s initiative aims to investigate how these exchanges operate within the country and whether they are following the regulations introduced in 2019. Deputy Secretary of Inspection Andrea Chaves emphasized the importance of understanding the operations of foreign exchanges to identify any potential illegal activities.
In addition to monitoring the operations of foreign exchanges, the tax department will also be focusing on collecting data about Brazilian wealth that should be subject to taxes. It is expected that an ordinance will be released summoning foreign exchanges to provide the necessary information. Unlike local Brazilian exchanges, foreign companies have not been required to report transactions, leading to concerns about potential tax evasion practices.
According to recent data cited by Reuters, there has been a significant increase in reported crypto amounts in Brazil over the past year. Individuals and legal entities reported a total of 133.6 billion reals ($24.6 billion) of crypto during the first half of 2023, with 14.5 billion reals ($2.7 billion) coming from transactions on foreign exchanges. These numbers reflect a substantial growth of 36.6% and 51.2% in each category compared to the previous year.
Brazil’s tax department is planning to release updated data through a technological update to provide more transparency in the crypto market. Third-party research reports have also indicated significant growth in the market. A recent report by Kaiko Research found that crypto trading volume involving the Brazilian real reached $6 billion between January and early May 2024, showing a 30% increase from the previous year. This data suggests that Brazil is emerging as a key player in the global crypto market, surpassing traditional fiat currency markets in trading volumes.
Overall, Brazil’s tax department’s efforts to regulate foreign crypto exchanges and monitor wealth subject to taxes reflect a growing trend towards regulatory oversight in the crypto space. With increased scrutiny and transparency measures, the Brazilian crypto market is poised to continue its growth and establish itself as a significant player in the global market.
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