Brazil’s tax authority is concerned over cryptocurrency-related problems, including money laundering and tax evasion. The institution has officially filed a proposal in order to regulate the digital currency field, which was revealed by the Department of Federal Revenue of Brazil (RFB). According to the document, any exchange will need to make financial reports each month.
The proposals disclosed by the RFB suggest that all virtual currency exchanges in the country must regularly submit detailed information on their financial activity, including the personal data of their clients. The new regulation should solve issues with tax compliance and money laundering, the authority claimed. Criminals or tax dodgers won’t be able to use crypto anymore because the question of anonymity will also be eliminated. Furthermore, it will boost transparency and increase credibility to a fintech industry that has been rapidly developing during the last couple of years.
The RFB also ask Brazilian citizens, as well as companies, that operate funds over $2,700 (10,000 reals) on foreign crypto exchanges on a monthly basis, to file a report, revealing the details of financial performance. The authority also designed the measures of punishment for those who fail to make a report in time. They will be required to pay a fine of $400 and those who tried to hide the true income will be levied with a three percent fee on the transaction value.
The cryptocurrency industry has extensively grown and expanded in Brazil over the last four years. The crypto market value has risen from $12.1 million in 2014 to $2.24 billion at the end of 2017 due to the investors seeking anonymity and softer regulation. As for this year, trade volumes in Brazil varied from $4.86 billion and $12.15 billion.
“The numbers and their annual growth demonstrate the relevance of the cryptocurrency market in Brazil, especially for the tax administration, since these transactions are subject to income tax on capital gains,” the RFB detailed.