Brazil has introduced a uniform 17.5% tax rate on all cryptocurrency profits under Provisional Measure No. 1303, replacing the former tiered tax system with exemptions for small-scale traders. This policy marks an end to the monthly exemption threshold of R$35,000 (~$6,298 USD), meaning all crypto investors in Brazil, regardless of income level or transaction volume, are now taxed consistently on gains.
The reform is part of a broader overhaul aligning taxation on crypto with other financial instruments such as stocks and bonds, which also face the same flat 17.5% tax. Meanwhile, certain previously exempt instruments will now incur a 5% tax rate. These fiscal measures aim to address imbalances created by the rollback of temporary financial transaction taxes and simplify the tax code for better transparency and predictability.
Reactions in Brazil's financial community are mixed. Larger investors may benefit from the simplification and lower cap compared to the previous 22% maximum rate on gains. However, smaller retail investors, who were previously exempt from paying tax on modest gains, now face new tax burdens. Critics claim this disproportionately favors wealthier market participants who could absorb the tax or relocate their trading activities abroad.
Additionally, legislative proposals targeting the crypto sector are underway, including bills to require Bitcoin miners to obtain licenses and pay daily taxes on mining operations. Such regulatory moves indicate Brazil's intent to modernize and control its growing digital asset ecosystem in line with global trends. The success of these reforms could become a benchmark for other nations thinking about similar crypto taxation policies.