Brazil Demands Overseas Exchanges Provide User Information to Combat Illegal Activities and Prevent Tax Evasion in the Wild World of Cryptocurrencies
Reuters reported that Brazil’s tax authorities are expected to summon overseas cryptocurrency exchanges to explain their operations and cooperation with local service providers, aimed at preventing potential illegal activities and obtaining financial information about local users to enforce the “Overseas Investment Income Tax” passed last year.
The Brazilian government revealed that the Federal Revenue Service will issue an ordinance this week and will call overseas exchanges providing cryptocurrency trading services in Brazil to understand their operations in the country and confirm whether their citizens are complying with the new tax laws.
Andrea Chaves, Deputy Head of the Supervision Department of the Federal Revenue Service, emphasized that their main focus is on how exchanges operate in Brazil to clarify if there is any illegal behavior.
Meanwhile, Wagner Lima, Minister of Risk Management of the Revenue Service, expressed the hope to understand the cooperation details between exchanges and domestic service providers, and to obtain the financial and tax information of the Brazilian people.
Currently, only local cryptocurrency exchanges have the obligation to report transactions, but it is expected to soon expand to offshore exchanges.
Previous reports from Kaiko Research showed that the main overseas exchanges operating in Brazil and with Portuguese language websites for local users are Binance, OKX, Coinbase, and KuCoin.
The market share of cryptocurrency transactions in Brazilian Real (BRL) shows a 30% increase compared to the same period last year, making Brazil the largest cryptocurrency market in Latin America and the seventh largest market globally.
Stablecoin transactions are also popular in the Brazilian market, accounting for slightly over 50% of the total, surpassing Bitcoin and Ethereum by about 45%.
According to local tax authorities, Brazilian citizens declared cryptocurrency assets worth 133.6 billion BRL (about 24 billion USD) in the first half of last year, a 36.6% increase from the same period last year. Of this, 14.5 billion BRL (about 2.61 billion USD) was declared through overseas exchanges, showing a 51.2% growth.
In response to this trend, the Brazilian authorities passed a tax law in December last year, imposing a 15% income tax on cryptocurrency profits and interest earned by Brazilians from overseas exchanges.
The article also discusses the security vulnerabilities of the OKX exchange in the Netherlands and its launch of exchange and Web3 wallet services.
