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Brazil’s Congress moves to levy higher taxes on cryptocurrencies

– Brazilian lawmakers are advancing legislation to increase taxes on cryptocurrencies held overseas.
– The congressional committee has approved amendments to a bill that recognizes cryptocurrencies as “financial assets” for tax purposes in foreign investments.
– The draft bill imposes taxes on gains from fluctuations in crypto asset prices against Brazil’s fiat currency and foreign exchange rate fluctuations.
– The goal of the revision is to promote equal tax treatment since crypto investments abroad currently receive lower tax breaks.
– Overseas earnings up to 6,000 Brazilian reais (~$1,200) will be exempt from taxation under the new rules.
– Earnings between 6,000 and 50,000 (~$10,000) will be subject to a 15% tax rate, and above this threshold, taxes will be applied at 22.5%.
– The changes will only apply to cryptocurrency exchanges without offices in Brazil.
– The new rules may make local exchanges a more cost-effective option for investors with gains above the top tax bracket.
– The legislation could potentially increase crypto exchange activity in Brazil and attract foreign players to establish offices in the country.
– Various global crypto exchanges like Binance, Coinbase, Bitso, and operate in Brazil, alongside local players such as Mercado Bitcoin and Foxbit.
– Brazil’s Congress will vote on the bill on August 28, and if approved, the new taxation will take effect in January 2024.
– The country’s central bank recently announced the rebranding of its central bank digital currency (CBDC) to Drex.
– As part of the launch of Drex, the central bank plans to introduce a tokenization system to expand business access to capital.

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