Cryptocurrency taxation has become a contentious issue in Brazil, with a recent Provisional Measure issued by the government sparking a legislative battle in Congress. The measure, which imposes a flat fee of 17.5% on all cryptocurrency income, has raised concerns among lawmakers who believe it may exceed the executive’s jurisdiction on tax matters.
Deputy Gustavo Gayer, from a party opposing President Lula’s coalition, has introduced a Legislative Decree Project aimed at rolling back the changes made by the government regarding crypto taxation. Gayer argues that the executive branch is overstepping its authority by imposing such a tax without the approval of Congress, which is the only entity empowered to change tax laws.
The project seeks to nullify the end of tax exemptions for small cryptocurrency holders introduced in Provisional Measure 1,303. Gayer contends that the Brazilian constitution limits the Executive’s power to issue Provisional Measures, especially when it comes to creating new taxes without legislative authorization. He emphasizes the need for a more thorough analysis of the fiscal, economic, and social impacts of regulating the cryptocurrency market.
Critics of the new tax regime, including members of the Brazilian crypto industry, fear that it could deter participation and drive users towards foreign and decentralized alternatives. They argue that such a tax could stifle innovation and hinder the growth of the industry in Brazil.
The Brazilian Congress is now tasked with evaluating the validity of the measure and deciding whether to approve or reject its implementation in the coming days. The outcome of this legislative battle will have significant implications for the future of cryptocurrency taxation in Brazil.
Stay updated on this developing story as Brazilian authorities grapple with the complexities of taxing cryptocurrency held in self-custody.