Crypto News Today: Brazil Considers Tax on International Crypto Transfers

Brazil is reportedly considering a tax on international crypto payments. The government plans to expand the Imposto sobre Operações Financeiras (IOF) to include digital asset transfers abroad. 

This move comes as Brazil aligns its rules with the global Crypto-Asset Reporting Framework (CARF). 

Officials say that the aim is to increase transparency, close loopholes and capture revenue from the growing crypto sector.

Brazil Plans Crypto Tax on International Payments

Officials from Brazil’s Finance Ministry are reviewing proposals to tax cross-border crypto transfers. The tax would treat some stablecoins and other digital assets like traditional foreign-exchange transactions. 

Sources told Reuters that the current exemption creates a loophole for importers and other businesses.

Currently, cryptocurrencies are exempt from IOF. However, capital gains on crypto are taxed at 17.5% Expanding the tax to cross-border payments would capture flows that now escape regulation. 

Authorities estimate Brazil may be losing over 30 billion dollars annually from unregulated crypto transfers used for payments and imports.

Officials are considering which cryptocurrencies and transactions would be subject to IOF. 

The focus includes both domestic exchanges and foreign providers serving Brazilian users. The government also wants to make sure that stablecoins cannot act as a substitute for traditional foreign exchange.

Alignment With CARF Enables Global Data Sharing

The Brazilian Federal Revenue Service announced it will align reporting rules with CARF via a legal act dated November 14. CARF is a global standard for sharing crypto account data among tax authorities. 

This alignment gives Brazil access to citizens’ foreign crypto accounts.

Brazil signed a statement in favour of CARF in late 2023. Other countries, including the United Arab Emirates, the EU and the United States have also joined or are considering joining. 

By using CARF, Brazil can detect tax avoidance and improve monitoring of international crypto flows.

This move complements the IOF tax expansion and the combination of reporting and taxation aims to close gaps in existing regulation. 

Central Bank Expands Oversight

Brazil’s Central Bank recently introduced rules treating certain stablecoin and crypto wallet operations as foreign-exchange activities. 

The rules extend consumer protection, transparency and Anti-Money Laundering (AML) obligations to crypto brokers, custodians and intermediaries.

These measures require crypto firms to obtain licenses, implement strong governance and maintain robust security standards. Foreign service providers must disclose operations and comply with reporting obligations. 

The new framework also integrates digital assets into the formal financial system while allowing authorities to monitor transactions better.

Related Reading: Brazil Tightens Oversight with New Crypto Rules

Closing Loopholes in Crypto Usage

The government aims to prevent regulatory arbitrage, where stablecoins and other digital assets can currently bypass traditional taxation. 

Officials said that the rules will make sure that these assets are treated like conventional foreign-exchange instruments.

Judicial authorities have also acted to close loopholes. In April, Brazilian judges were authorised to seize crypto assets from debtors. A memo from the Superior Court of Justice also stated that crypto can be used as payment or a store of value, despite not being legal tender.

The IOF expansion, CARF alignment and judicial powers together create a tighter regulatory environment. 

Analysts say the approach could increase compliance costs for exchanges and fintechs. However, it would reduce tax avoidance and improve consumer protection.

Fiscal and Criminal Measures

Lawmakers are considering an “anti-faction” bill. It allows authorities to liquidate crypto seized in criminal investigations before trial. 

The law treats digital assets like cash or securities. This approach aims to attack criminal networks that use crypto for money laundering.

Combined with fiscal and supervisory measures, the government is asserting control over the crypto sector. 

The strategy integrates taxation, oversight and anti-crime initiatives and authorities want to make sure that digital assets contribute to the economy.