Brazil’s tax authority is seeking ways to prevent tax evasion on profits from cryptocurrency transactions, Cointelegraph reported Thursday.
The new system prepared by the government will allow the Department of Federal Revenue of Brazil (RFB) to get data from trading intermediaries, such as crypto exchanges. Once the new rules come into force in September 2019, the RFB will be able to solicit information on customers who are suspected of tax evasion.
Brokerage firms or exchanges located in Brazil, will be obliged to inform the tax watchdog of all cryptocurrency transactions performed, regardless of their value. As for the exchanges based out abroad, the customers themselves will have to report the transaction themselves, whenever their monthly trading volumes exceeds R$ 30,000 (roughly $7,800).
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Among the information requested by the RFB are the dates and types of transactions, personal info of users who carried out the trades, the value of the transaction, and the service fees charged for the execution. The reports will have to be provided up to the last working day of the calendar month following the month in which the operation took place.
Brazilan president doesn’t know what Bitcoin is
The move highlights how regulators around the world are not only concerned with combating cryptocurrency related crimes, but also chasing those who use the virtual asset to hide wealth or avoid paying taxes. This is nothing new, but a bit complicated as a booming market in 2017 and early 2018 made some crypto dealers millionaires virtually overnight while others lost their fortunes following last year’s market-wide crash.
Under the current laws, crypto exchanges and other businesses serving as middlemen can provide the data on their clients voluntarily, but after the legislation mentioned above is introduced, they will not be able to refuse or appeal the authorities’ requests to turn over information.
Brazil’s move towards cryptocurrency regulation took a step closer in May after the country’s parliament established a commission to consider the matter. Although their new president lacks basic knowledge about what Bitcoin actually is, still the country has been the biggest cryptocurrency hub in Latin America and generates the highest turnover in all the region.