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The Brazilian government recently passed a new law, compelling every citizen to declare his or her crypto transactions at the end of every month. The law, which took effect on August 1, is aimed at curbing criminal acts in the crypto sphere including money laundering, trafficking, and tax evasion.
According to a major news outlet in Brazil, Agencia Brasil, citizens of Brazil must report their crypto transactions and holdings to the country’s IRS before the last day of the following month. That is, all crypto gains made in August must be reported on or before the last business day in September.
The new law, filed in Normative Instruction RFB 1888/20119, urges everyone who deals with virtual assets including private users, crypto exchanges, brokerage firms and what have you, to give a complete report of all the crypto transactions that were made the preceding month. This includes virtual assets bought, exchanged, held, bartered, sold, donated, transferred, etc. Virtually everything that has to do with crypto coins must be reported every month.
While Bitcoin(BTC)trade happens to be the most traded and familiar cryptocurrncy today, the monthly virtual assets declaration law is not restricted to Bitcoin users only. Any form of virtual currency – both popular digital coins and unknown digital coins – must be reported with the state’s financial agency every month without exceptions.
However, Agencia Brasil reports that this declaration is only applicable to transactions that exceed 30,000 Brazilian real – equivalent to $7,800 US dollars. For transactions over 30,000 Brazilian real (around $7,700), citizens are expected to report such transactions via the National Collection System made possible through the Virtual Customer Service Center (e-CAC).
Agencia Brasil stated that two declaratory acts were published earlier in June to provide a better insight on how this system operates. The acts (ADEs) of the General Coordination of Programming and Studies (Copes) are available here in Portuguese.
Cryptocurrency Measures to Protect Brazilian Economy
Failure to comply with these rules will prompt strict penalties. Agencia Brasil stated that “Penalties for not providing information are fines ranging from R100 to R500 or from 1.5% to 3% of the amount of the unreported transaction.”
The Brazilian government believes this measure has been effected in several other countries across the globe and that it is high time they got on board to protect the economy and crypto investors.
Another major reason for this rule is the fact that the crypto market in Brazil attracts more investors than the traditional financial market. Evading tax through this form of modern virtual currency could completely cripple the economy.