Last updated on October 12th, 2017 at 01:24 pm
The Brazillian government has declared that it does not see bitcoin as a currency. Investors will have to pay taxes, but ordinary users will not.
Brazil is treating cryptocurrencies as assets, with the Receita Federal enforcing a 15% capital gains tax at the time of sale.
But, no taxes will need to be paid by those making transactions under 35,000 reals (R$), which is nearly $16,000. This means that when making small consumer purchases, Brazilian bitcoin users won’t have to compute capital gains taxes.
The Receita Federal also now requires those who own over R$1,000 in cryptocurrency assets to declare their accounts yearly.
It is worth mentioning that the tax authority’s rules on cryptocurrencies fit with existing laws. The government has stated that it does not feel it is important to have special laws for cryptocurrencies.
José Benchimol, Brazilian small business owner and bitcoin supporter, sees the news in a positive light. He said that the tax treatment will not obstruct consumers from embracing cryptocurrencies as a method of payment.
“Considering the circumstances and comparing this decision to other countries’ decisions, I consider it good news. Most consumers and investors will not hit the R$35000 in transactions, which tend facilitate its use as a currency and investment tool. For the bigger investors, the government will charge a tax rate of 15% on capital gains, which is in line with capital gains from major investments in the county – stocks, bonds, real estate and so on,” said Benchimol.
Bernardo Quintão, BitWifi co-founder, stated to digital currency news website CoinDesk that despite the government’s announcement that it doesn’t see bitcoin as a currency, the tax regulation is a good thing.
“Personally, for the Brazilian pattern of dealing with novel technology, I think it is a positive approach indeed. It will be a long way before cryptocurrencies are accepted as currency here and this is a good first step,” said Quintão.