Effective immediately from New Year's Day, Brazil will impose a 15% tax on overseas investment profits, including offshore crypto platforms.
The Brazilian Senate and Chamber of Deputies have approved a tax bill that may require Brazilian citizens to pay a capital gains tax of 15% or higher on their overseas investments. If ultimately approved by the Brazilian President, the new tax regulations could take effect as early as January 1st next year.
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Brazil Plans to Tax Overseas Capital Gains
According to Reuters, this tax proposal is not just aimed at cryptocurrency investors, but at taxing capital gains from Brazilian citizens investing abroad, in order to increase government revenue. The government has set a tax revenue target of $4 billion for 2024.
Brazilian President Luiz Inacio Lula da Silva's administration issued an executive order that income obtained starting January 1st next year will be included in tax calculations. However, this still needs to be voted on by the parliament within four months and signed by the president to become permanent law.
Taxation Standards: Income Below $1,203 Exempt
Income from overseas investments will be taxed upon asset sales, expected to be done annually by December 31st. The tax standards are as follows:
Exempt: Income below 6,000 BRL $1,203 USD
15%: Income above 6,000 BRL, below 50,000 BRL
22.5%: Income exceeding 50,000 BRL
Poor Government Management Leading to Increased Taxation?
The Treasury Department stated that the new tax system is expected to raise around 32 billion BRL, approximately $6.5 billion USD in 2023, close to 36 billion BRL, about $7.31 billion USD by 2024, and reach 67 billion BRL, roughly $13.6 billion USD by 2025.
Brazilian Senator Rogerio Marinho criticized the new policy, attributing it to poor government management leading to the introduction of new tax laws.
This new tax system has been under discussion since August this year and appears to be moving forward under the government's active promotion.
New Revenue Source for the Government! Brazilian Congress Plans to Tax Cryptocurrency Investment Gains More Heavily