Brazil Imposes 17.5% Crypto Tax, Scrapping Small Investor Exemptions

- Brazil introduces flat 17.5% tax on crypto gains, ends small investor exemptions. - New policy sparks concerns for Brazil's crypto market competitiveness. On June 15, 2025, CoinDesk, Cointelegraph, AInvest, FinanceFeeds, and Cryptopolitan reported that Brazil implemented a new 17.5% flat tax rate on all cryptocurrency capital gains, a measure which also ends exemptions for small investors. Effective June 12, 2025, Provisional Measure 1303 imposes this flat 17.5% tax rate. The measure also terminates the previous exemption for monthly profits up to 35,000 Brazilian Reais (approximately $6,300). The new policy uniformly taxes all crypto capital gains at 17.5%, replacing the former progressive system that taxed profits above 35,000 Brazilian Reais at rates of 15% to 22.5%. This change signifies a higher tax burden for small investors, who previously benefited from the tax exemption. In contrast, high-net-worth individuals and large-volume traders may see their effective tax rates decrease, as the previous maximum rate was 22.5%. In addition to the flat tax rate, the new rules expand the taxable base to include crypto assets held in self-custody wallets and foreign accounts. The government will assess taxes quarterly, and investors may offset losses incurred over the previous five quarters against their gains. However, the government will tighten this loss deduction period beginning in 2026. Provisional Measure 1303 also introduces a 5% tax on previously tax-free fixed-income instruments, such as Agribusiness and Real Estate Credit Letters (LCAs and LCIs) and Real Estate and Agribusiness Receivables Certificates (CRIs and CRAs). Moreover, the tax on betting revenue has increased from 12% to 18%. Stakeholders in Brazil's crypto sector have raised concerns about the potential adverse effects of the new tax rules. On June 15, Cryptopolitan, quoting a report from Portal do Bitcoin, stated that crypto exchange Mercado Bitcoin criticized the lack of industry engagement before the announcement and warned that these changes might undermine the competitiveness of Brazil's crypto market. Other advocacy groups, including the Brazilian Association of Cryptoeconomics and The Brazilian Association of Fintechs, echoed these concerns, suggesting that the increased complexity of the new rules might cause investors to shift towards offshore or non-compliant platforms. In response to the new regulatory measures, Deputy Gustavo Gayer filed a legislative decree to annul Provisional Measure 1303, arguing that the measure oversteps executive authority and conflicts with the existing tax system, which he states requires proper legislative approval. On June 15, Cryptopolitan reported that the Chamber of Deputies cautioned the Provisional Measure might not pass without substantial revisions and further stated that the Executive must demonstrate a commitment to reduce governmental expenses for the measure to pass. According to CoinMarketCap on June 15, as of 12:00 UTC, Bitcoin (BTC) was trading at $25,401, with a 3.1% increase in 24-hour trading volume.