The Brazilian Department of Federal Revenue (RFB) has announced that as of August 1 2019, all crypto transactions must be reported for taxation purposes by local exchanges, businesses, or individuals using cryptocurrencies such as Bitcoin or Ethereum.
The new crypto regulation
According to the RFB website and government portals, this new regulation covers all kinds of crypto-related activities such as buying and selling, donations, barters, deposits, withdrawals, and others such activities.
This rule applies mainly to businesses – especially crypto exchanges – although any individual who transacts more than R$30,000 on a monthly basis, or around $7,000 at the current rate, will also have to send this information to the RFB.
The measure requires entities to provide monthly reports by the end of the month following the month when the crypto-related transactions occurred, the report notes. As such, any information for the month of August should be provided by the last business day of September.
How to report crypto assets
In order to report crypto assets, users will have to fill in a form made available by the Ministry of Economics – available here.
Any individual or company that does not comply with the newly released regulation may face heavy charges. Those who fail to report their crypto transactions will face penalties ranging from 100 to 500 Brazil reais – or around $25 to $130.
The RFB is also authorised to charge from 1.5% to 3% of the amount of the unreported transaction as a penalty, according to the report.
By applying this new measure, the authorities intend to combat illicit activities such as money laundering, tax evasion, and terrorist financing.
Recently, the head of the Federation of Industries of the State of São Paulo expressed concerns that Brazilians could start using crypto to evade taxes as it is hard to trace the ownership of the coins – even though it’s possible with certain tools.
What does the future hold?
Governments try to ban bitcoin? LOL
The image below includes a signed bitcoin transaction transferring $12m USD. pic.twitter.com/4QaH1s7br8
— Andreas M. Antonopoulos (@aantonop) May 27, 2015
Personally speaking, I believe most countries will eventually follow in Brazil’s footsteps and look to regulate crypto transactions.
However, if businesses and individuals are too heavily regulated, I’m of the opinion they’ll eventually move to more crypto-friendly places, given the decentralised nature of cryptocurrencies.