Brazil is reportedly evaluating whether to impose taxes on cryptocurrency used for international payments as the government works to align its regulations with emerging global tax standards. According to a Reuters report citing officials familiar with the talks, policymakers are exploring extending the Imposto sobre Operações Financeiras (IOF) tax to certain digital asset transactions carried out across borders.
Representatives from the finance ministry have reportedly discussed broadening the scope of the IOF during recent closed-door meetings. At present, cryptocurrencies are exempt from the tax, though capital gains from their sale are subject to a 17.5% flat rate.
Brazil adopts OECD’s crypto-asset reporting framework
On Wednesday, Brazil’s Federal Revenue Service confirmed it will update its reporting rules for crypto-asset transactions to align with the global Crypto-Asset Reporting Framework (CARF). The legal act, dated Nov. 14, will enable Brazilian authorities to access data on citizens’ overseas crypto accounts through the OECD’s international data-sharing system.
Brazil signaled support for CARF in late 2023, and the move mirrors similar steps by several major jurisdictions. The White House is reviewing proposals for the United States to join CARF, the EU recently agreed to participate, and the United Arab Emirates signed on in September.
Government moves to close crypto tax loopholes
Officials told Reuters that extending IOF to digital assets would address what they view as a regulatory gap. Stablecoins and other crypto assets can act as substitutes for foreign exchange or cross-border payment channels, allowing users to bypass taxes applied to traditional transfers.
The initiative also aligns with Brazil’s recent push to tighten oversight of digital finance. This month, the central bank rolled out new rules treating some stablecoin and wallet activities as foreign exchange operations, bringing consumer protection, transparency, and Anti-Money Laundering requirements to crypto brokers and custodians.
In April, Brazilian courts were granted authority to seize crypto assets from debtors, marking another step toward closing longstanding loopholes. The Superior Court of Justice noted that although crypto assets are not legal tender, they function as both a means of payment and a store of value.