The Federal Revenue of Brazil wants investors to pay taxes on cryptocurrency trading profits, though there is no exchange for Brazil's national currency. 


Brazil's federal reserve (RFB) has declared that Brazilian investors within the crypto-asset market should pay taxation on transactions that involve the like-kind exchange of cryptocurrencies; for instance, Bitcoin (BTC) for Ethereum (ETH). 

The RFB's declaration was published within the Diário Oficial da União and was the results of a consultation created by a national of the country to the regulator. At the tip of last year, the cluster issued an opinion in which it claimed that commercialism between cryptocurrency pairs is taxable though there's no conversion to the real (Brazil's national currency). 

Although it does not specify what can be understood as "profit," since within the exchange of 1 crypto quality for another there's no capital gain in act currency, it points out that there's, even so, the duty to pay taxes on the eventual profit: 

"The capital gain calculated on the sale of cryptocurrencies, when one is directly used in the acquisition of another, even if the acquisition cryptocurrency is not previously converted into reais or another fiat currency, is taxed by the individual's income tax."

However it should be noted that not all crypto investors need to declare their trades, because the regulator established that solely investors who trade over BRL 35,000 (roughly $7263.67) in cryptocurrencies should pay income tax. 

"Capital gains earned on the sale of cryptocurrencies are exempt from tax if the full price of the sales in a month, of all types of cryptoassets or virtual currencies, no matter their name, is adequate or but BRL 35,000, 00 (thirty-five thousand reais)," declared the RFB. 

Federal deputy Kim Kataguiri (Podemos, or the National Labor Party) previously declared that he considers the Federal Revenue's proposal to be illegal and asked the National Congress to decree the immediate suspension of the determination. 

According to Kataguiri, the regulation on the calculation and payment of IRPF (Individual financial gain Tax) establishes that there'll only be financial gain in exchanges once currency is concerned (articles 134 and 136 of decrees 9580 and 2018) — that isn't the case when trading like-kind crypto assets. 

"In the exchange between crypto assets, there's no exchange involving currency; one crypto quality is changed for an additional, therefore, there's no equity increase," declared Kataguiri. 

The parliamentarian argued that, consistent to article a hundred and ten of the Tax Code, the tax law cannot modification the definition of personal law institutes, and thus the Federal Revenue doesn't have the facility to vary an understanding of the Tax Code. 

"If the Union desires to tax the exchange of crypto-assets, legal innovation are necessary and, even during this case, doubts could also be raised regarding the constitutionality of the new law. What we've got may be a completely illegal interpretation created by the tax authorities, that clearly exceeds the power to regulate," to regulate Kataguiri. 

Brazilian investors are cryptocurrency market are needed to declare their crypto assets to the regulator since 2016. In 2019, the Federal Revenue Service of the country revealed Normative Instruction 1888, that determines that all national exchanges area unit needed to report all cryptocurrency transactions between users to the regulator on a monthly basis.

( Cassio Gusson, Cointlegraph, 2022 )