Death and taxes are not something we can escape in this world. And that means each country is likely to impose the taxes on what we earn online through crypto or any foreign income. So that's totally inescapable for all of us regardless of where we are living.
Africa and South America enjoyed the crypto without any taxes and managed to use the crypto for internal money transfer. Many nations enjoyed the govt free crypto for years. But then govt stated becoming more technical and intelligent and now they are started applying the taxes as well.
Brazil recently got more smart about the income earned through crypto. Like the crypto income that is made through content sites, exchanges or any other form through online means. They are going to charge a certain tax in a flat way to the crypto income.
Let's discuss how this new tax imposition is going to work for the nation.
Brazil Central Bank and New Regulations of Comissão de Valores Mobiliários
Most of the brazil's regulations are similar to the US's SEC imposed norms and the regulated policies for the exchange and the crypto business. And they are being reasonable towards the income earned through the crypto and they want to slowly push for the regulations as well. And they are recently taking help of the court to impose it through new rules.
This new type of the SEC like entity they have keeps an eye on variety of the forex regulations and now they are also going to be putting those regulations on the existing business and the services too. So we have to look at variety of those new regulations as they come into the play. But that too would happen one change at a time.
15% Flat Tax on Crypto Income
Say a scenario of a brazil person who is on Hive and earns from here and then get into the exchange and uses fiat for local expenses. So there would be a charge of around 15% flat for that person and it would be imposed during the conversion if the exchane is compliant with the govt. And that too would happen eventually in the process.
As you can guess the 15% tax imposition is not going to be taken in a good way. As people hate taxes even if it is 1 percent and so the same would continue here as well. People are going to hate it and then they are going to be bringing the CBDC would be tax free and that would hurt the crypto slowly.
8% till December End and 15% after January 2024
And the panic is going to continue on the taxes. So they have made things easier. You can do your transaction before the year ends and the taxes would be around 8 percent and the 15 percent would apply next year onwards. Which would make many people sell out their low value assets as the holding would be more expensive too.
Does it meant for reducing the asset investment into the foreign crypto? Yes. It seems that way, there would be no point holding the dogecoin if you have 15 percent tax on you that won't cover the profit. So it seems like this was planned and designed in a way to reduce the low value HODL.
Brazil's new tax regulation and the percentage are heavy. And there is very little one can do about it. You can make sure to open foreign banks and shell companies and move funds to not appear crypto income but that is as much as you can do. Like someone said, death and the taxes are inescapable. Forever!