In a significant shift towards regulating the crypto landscape, Brazil’s finance ministry has streamlined its approach to cryptocurrency taxation. Effective June 12, Provisional Measure 1303 eliminates the previous tiered tax structure, introducing a uniform tax rate. This change removes a monthly tax exemption for individuals who sold up to R$35,000 (approximately $6,300), meaning that all capital gains from cryptocurrencies will now be taxed at a rate of 17.5%.

Uniform Taxation for All Cryptocurrency Transactions

Reports indicate that the new tax regulation establishes a level playing field for all crypto investors. Previously, small investors enjoyed a tax-free threshold; however, they will now also incur a 17.5% tax on any profits received. Meanwhile, larger investors have the potential to benefit from this new system, as those who previously faced a 22.5% tax rate for transactions exceeding R$30 million will now only be liable for the flat 17.5% rate.

Impact on Small Investers

According to financial analysts, individual traders who relied on the monthly exemption will encounter a significant tax burden. For instance, a seller who previously transacted R$30,000 in cryptocurrencies and paid no taxes will now owe R$5,250, marking a dramatic financial increase for casual traders.

BREAKING: New tax system has been implemented in Brazil, affecting all cryptocurrency transactions with a flat 17.5% tax! Retail traders stand to face larger tax bills, while bigger investors might find relief. #Crypto #Brazil… pic.twitter.com/example

— CryptoUpdates (@CryptoUpdates) Date

Interestingly, larger traders handling amounts like R$10 million will see no change in their tax liability, continuing to owe approximately R$1.75 million. However, those trading over R$30 million monthly stand to save considerable amounts due to the reduction in rate.

Quarterly Tax Reporting and Loss Adjustments

The reformed tax structure also mandates that crypto assets held in personal and overseas wallets must be reported quarterly. Investors can offset any losses from trading against gains made over the last five quarters. However, starting from 2026, the allowable offset duration will limit losses to only the most recent quarters.

Taxation Extends Beyond Cryptocurrencies

This new tax reform is not exclusively focused on cryptocurrencies. Investment products such as fixed-income securities—specifically LCAs, LCIs, CRIs, and CRAs—now carry a 5% tax on profits. Betting companies will also see tax rates rise from 12% to 18%, indicating a broader fiscal strategy aimed at enhancing revenue.

While the ministry has not disclosed the expected increase in revenue, lawmakers are pursuing avenues to secure a more stable financial inflow following a previous attempt to impose a Financial Transaction Tax, which faced vigorous opposition.

Simultaneously, a draft legislation is being considered that would allow employers to compensate their staff partially in cryptocurrency, with a limit set at 50%. Complete cryptocurrency payments may be permitted for international employees or contract workers under stringent guidelines.

Regular employee wages will remain in traditional currency, although contractors may opt for full crypto payments if both parties consent. All transactions will utilize exchange rates validated by Central Bank-approved mechanisms.

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