Brazilian National Congress is considering a proposed law which is on the subject of crypto and intends to collect revenues in the form of “taxes” against crypto transactions, however, the law has become a hot debate because it provides for a certain timeframe within which the legislation will automatically start imposing taxes upon crypto, subject to it being passed by the National Congress.
A Bill of the draft namely Bill 2140/21 had been presented before the Brazilian National Congress regarding virtual currencies. The draft proposal aimed at collecting taxes against local and foreign virtual currency transactions being carried out by the national taxpayers. Currently, the draft bill is under consideration by the members of National Congress of Brazil. The bill was drafted in June, 2021 by the country’s Chamber of Deputies.
While drafting the law proposal, Chamber of Deputies inserted a timeframe of 6 months in the draft law. This means that if the Congress decides to pass the law, then the law would automatically become effective after lapse of 180 days period.
However, until and unless the bill is not approved, it wouldn’t be possible for the tax collecting authority to impose tax upon crypto transactions. Instead, it would only give 6 months’ timeframe for the authority to lay down entire infrastructure for tax collection purposes.
So far crypto transactions are exempted from any kind of tax. It would even be wrong to assume that crypto tax is “exempted”. In fact, currently there is no law in Brazil which specifically deals with cryptocurrencies and provide for any sort of tax against crypto transactions.
An official from the Chambers of Deputy namely Alexandre Frota stated that currently the crypto investors are exposed to potential risks. According to Frota, there is no crypto-specific law with regard to virtual currencies in the country. In the absence of the law, there is potential risk and harm that could be caused upon the Brazilian crypto investors, advised Frota.
It was furthermore suggested by Frota that the country’s crypto space needs supervision and control of rigorous nature. When it comes crypto fraud and scams, Brazil is amongst one of those countries where such instances are quite often.
However, the state machinery, particularly its crime prevention authorities, are highly efficient in the prevention of such crimes. There have been a number of crypto Ponzi schemes which emerged in Brazil. But before they could cause any harm upon the Brazilian investors, the authorities intervened in time and prevented the crime.
Even there was a crackdown operation conducted by Brazilian law enforcement agencies against crypto fraudsters and Ponzi schemes. Resultantly, most of the Brazilian crypto space was cleaned by closing down such schemes and apprehending the fraudsters. Most recently, the country has also adopted KYC and AML policies and has ensured its quick implementation without wasting time.
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