Cryptocurrency traders located in Brazil will be required to report their transactions to the country’s National Treasury.
Brazil’s Department of Federal Revenue reeased guidelines in May 2019 regarding crypto-related transactions. The agency noted that digital asset transfers of $30,000 Brazilian real (appr. $7,600) or more must be reported to the nation’s tax department.
Bitcoin Trading Volumes Surge, Tax Authorities Demand Disclosure
According to Coindesk, Brazilian authorities are planning to closely track capital gains made from digital assets, in order to increase tax revenues. The country’s tax collection agency is targeting private individual investors and local firms that may be dealing in crypto assets.
Notably, Bitcoin trading volumes in Brazil and other South American nations such as Argentina and Venezuela have skyrocketed due (partially) to the instability of local economies and rising inflation from collapsing fiat currencies.
In April 2019, crypto trading volumes in Brazil surged to almost 100 BTC. The combined value of the nation’s digital asset market surpassed $8 billion reals in 2018, the Brazilian National Treasury reported.
Crypto Transactions Must Be Reported Each Month
Transaction details involving the buying, selling, or donation of cryptocurrencies must be submitted to the country’s National Collection department, via the Virtual Service Center (e-CAC). The information should be turned in by the last business or working day of each month.
Failure to accurately report capital gains from digital currency transactions will result in sanctions, the nation’s tax authorities noted. Brazilian residents who do not file taxes on any crypto earnings will be fined anywhere between 100 to 1000 reals. Meanwhile, inaccurate or incomplete information regarding cryptocurrency profits could result in a fine of up to 3% of the total estimated value of all transactions.
Rules Aimed at Preventing Illicit Activities
Local sources stated that the new reporting guidelines for crypto assets were introduced in order to prevent illicit activities such as money laundering, tax evasion, terrorism financing, drug and weapons trafficking (through the use of pseudynmous digital currencies).
As confirmed by The Rio Times, the mandatory provision for reporting crypto transactions was made effective on August 1, 2019.
Last month, four of Brazil’s largest financial authorities suggested a regulatory sandbox program for the latest technologies being used in the crypto and fintech industries. The aim of the sandbox is to help the nation’s regulators develop a better understanding of cryptocurrencies and their potential impact on the global economy.