The Brazil Senate has approved new rules that will mandate locals to pay up to 15% tax on income generated from cryptocurrencies on offshore exchanges.

According to a live recording from the Federal Senate, the new rule applies to crypto users with assets worth more than R$6,000 ($1,200) on all offshore exchanges.

Brazilian Crypto Users to Pay 15% Tax

The proposed bill has gained approval from the Chamber of Deputies and the Senate’s Economic Affairs Committee. It is on its way to being greenlighted by President Luiz Inácio Lula da Silva. The president’s approval is expected to come quickly as his administration initiated the proposal.

The new bill classifies crypto assets and wallets on offshore platforms as financial investments and will subject them to the latest tax rules in accordance with the regulations of the Special Secretariat of the Federal Revenue of Brazil.

In addition to cryptocurrencies, the bill also affects exclusive funds – investment funds with a single shareholder – and offshore applications, which are abroad companies that invest in the local financial market.

The rule will become effective from January 1, 2024. Income on assets accessed before December 31, 2023, will be taxed at 8%, while funds earned before January will be taxed when accessed.

Brazil to Raise $4B By 2024

Brazil’s central bank has found that Brazilians have roughly R$200 billion (more than $40.7 billion) in offshore assets, the majority of which are investment funds and stakes in companies. With the new tax rules coming into effect, the government looks to raise R$20.3 billion ($4.1 billion) in 2024 and R$54 billion ($11 billion) by 2026.

Notably, some members of the Senate opposed the bill. Senator Rogério Marinho said the proposed tax rule proved that the government used outdated techniques and created taxes to hide its inefficiency in managing the economy.

Although several deputies have proposed changes to the bill, the alterations are yet to be implemented.

The latest development comes less than six months after the president empowered the central bank to supervise the local crypto sector alongside the Comissão de Valores Mobiliários – Brazil’s Securities and Exchange Commission, which oversees coins classified as securities.