The Brazilian government is considering imposing taxes on cryptocurrency transactions as a measure to mitigate the negative social impact of the increase in financial transaction tax (IOF). According to Foresight News, this move was made after the government officially announced the increase in IOF tax on May 22.
Immediately after the announcement, the President of the Brazilian Lower House, Mr. Hugo Motta, proposed publicly including cryptocurrency in the IOF tax category. However, he also emphasized that this is only a proposal and has not been officially approved. This proposal immediately sparked controversy in the Brazilian cryptocurrency community.
Ms. Vanessa Butalla, Legal Vice President at Mercado Bitcoin exchange, stated that according to the current regulations of the Brazilian Tax Authority (Receita Federal), imposing IOF tax on cryptocurrency is no different from taxing investment assets, which lacks a clear legal basis. She believes that IOF was originally designed to apply to credit, foreign exchange, and insurance transactions – while cryptocurrency has not yet been classified as a traditional financial asset.
Lawyer Daniel de Paiva Gomes, partner at Paiva Gomes law firm, also agrees with this view. He emphasized that only Congress has the authority to pass a law to officially include cryptocurrency in the taxable asset category. The current government only has the right to adjust tax rates or application periods, but cannot unilaterally expand the scope of taxable objects.
Taxing cryptocurrency in Brazil is a sensitive topic, reflecting the conflict between the state's need to increase budget revenue and the desire to develop the domestic blockchain industry. If the proposal is approved, this could be a major turning point affecting cryptocurrency investors and exchanges in the country.
