Brazil’s tax authority has published proposals to regulate the cryptocurrency landscape over concerns digital assets are being used to launder money and evade tax. A document released by the Department of Federal Revenue of Brasil (RFB) disclosed plans that will force cryptocurrency traders to reveal their identities and for exchanges to submit financial reports to the authority each month.
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Draft Tax Guidelines Compel Exchanges to Furnish RFB With Monthly Financial Reports
In proposals released earlier this week, the RFB stated that all digital currency exchanges in Brazil are now required to provide monthly updates of financial performance, including personal information of dealers. The ancillary obligations are for tax compliance purposes and also to prevent alleged money laundering, the regulator said. RFB indicated that this will help bring transparency and confidence to a sector that in the last five years has seen explosive growth – so big that the number of cryptocurrency investors has eclipsed that of those trading in common stocks on Brazil’s Sao Paulo-based B3 Stock Exchange.
The draft means that traders would no longer be able to operate anonymously. Until now, anybody buying and selling bitcoin and other digital currencies have been able to do so anonymously, allegedly making it attractive to criminals and tax dodgers, the authority claims.
According to the RFB, Brazilian residents and companies that transact more than 10,000 reals (about $2,700) on foreign cryptocurrency exchanges per month are required to report this information. Individuals who fail to comply by delaying tax declarations face a fine of $400 while a three-percent fee on the transaction value will be levied against those who lie about their income or provide insufficient information.