Brazil’s tax authority is reportedly planning to gather information from foreign cryptocurrency exchanges to understand their operations in the country and ensure compliance with new tax laws among its citizens. The Receita Federal do Brasil (Federal Revenue of Brazil) is set to issue an ordinance requiring these firms to provide additional details later this week, as per comments from Brazilian officials cited in a June 18 Reuters report.
“We are concerned about understanding their operations here and identifying any potential illegal activities,” stated Andrea Chaves, DFR’s Deputy Secretary of Inspection in the Reuters report. Previously, only local cryptocurrency exchanges were required to report transactions on their platforms.
In December, Brazil enacted a law mandating a 15% income tax on cryptocurrency profits and dividends earned on foreign exchanges. The tax authority aims to collect approximately $4 billion (20 billion Brazilian reals) in the 2024 fiscal year.
Major crypto exchanges in Brazil include Binance, Mercado Bitcoin, and Bitso. Binance currently dominates the market with 79% of all transactions, although its position has been challenged by Mercado Bitcoin and Bitso in recent months.
Noteworthy platforms like Binance, Coinbase, OKX, and KuCoin operate in Brazil, contributing to the significant increase in cryptocurrency trading activity in the country. Trading volume surged by 30% year-on-year to $6 billion between January and May 2024.
A Kaiko report highlighted Brazil as the largest market player in Latin America and the seventh-largest globally for fiat currency trade. Stablecoin transfers are a key driver of cryptocurrency activity in the country.
In a related development, El Salvador has eliminated taxes on tech innovation to boost economic growth.