Brazil is reportedly considering imposing a tax on cryptocurrencies used in international payments. The move is part of the country’s efforts to close regulatory gaps, meet global tax reporting standards and potentially increase public revenue.
Brazil’s Federal Tax Service recently announced that it will introduce cryptocurrency asset transaction reporting in line with the international tax system.
Brazil considers expansion of financial transaction tax
Brazil is considering introducing a tax on the use of cryptocurrencies for cross-border payments, Reuters reported, citing “an official with direct knowledge of the discussions.” The government is working to close the gap in the existing levy on foreign exchange transactions, the sources said on condition of anonymity.
Brazil’s Ministry of Finance is reportedly considering expanding the Imposto sobre Operações Financeiras (IOF), a federal tax applied to financial operations such as foreign exchange, credit, and insurance, to include certain international transfers using digital assets, including stablecoins.
Earlier this month, Brazil’s central bank announced long-awaited regulations governing the trading of virtual assets, including cryptocurrencies. The new framework extends existing anti-money laundering regulations to virtual asset service providers. Under these rules, the sale, purchase, or exchange of virtual assets pegged to fiat currencies, such as stablecoins, is classified as a foreign exchange transaction.
Currently, cryptocurrencies are exempt from IOF tax, but investors still have to pay a flat tax rate of 17.5% on capital gains on crypto assets. The central bank’s new regulations will come into effect from February 2027.
Reuters sources said the goal of the proposed tax changes was not only to close loopholes in Brazil’s current system, but also to increase government revenue. IOF-exempt cryptocurrencies, especially stablecoins, are often used as a replacement for traditional foreign exchange while avoiding the taxes that typically apply to such transactions.
“The new regulations are aimed at ensuring that the use of stablecoins does not create regulatory arbitrage over traditional foreign exchange markets,” a source told Reuters.
Brazil adjusts reporting rules under CARF
This report comes shortly after Brazil’s Federal Tax Service announced that it would align reporting requirements for cryptocurrency asset transactions with the global Crypto Asset Reporting Framework (CARF). This arrangement gives Brazilian authorities access to information about citizens’ offshore cryptocurrency accounts.
This news follows reports that the White House is considering a proposal from the Internal Revenue Service (IRS) to join CARF.
Disclaimer: This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.