In Brazil, encrypted currency transactions are now a key element in the broader debate on taxation in the financial sector. On 22 May, the Brazilian Government introduced a series of changes to increase the existing Financial Transactions Tax (IOF), which provoked public opposition.
At present, legislators are discussing the next steps to prevent the Government from continuing in this direction and have proposed the possibility of incorporating encrypted currency into such taxes, with a view to reducing the impact on broader objectives.
Ugo Mota, Speaker of the House of Representatives, referred to the idea in a public statement that preceded a meeting with Fernando Haddad, Minister of Finance, and David Alculembre, President of the Senate. According to local media reports, Mota has clearly expressed her opposition to this increase, stating that the Brazilian people cannot afford more tax burdens, but he supports the idea of extending it to encrypted currency transactions.
However, he acknowledged that it was only a proposal and had not yet been decided. This idea has given rise to different reactions in Brazil ' s encrypted currency industry, some claiming that it would be illegal.
Mercado Bitcoin’s Vice-President for Law, Compliance and Risk, Vanessa Butala, stated that this would not be possible because of the way in which the Brazilian Revenue Authority handled encrypted money. “It was like deciding to levy IOF on investment property,” she stressed.
The partner of Paiva Gomes Advogados, Daniel de Paiva Gómez, told the newspaper that any taxation based on this executive order would be illegal, as it would not change the established law. “Only a law approved by the National Congress could change the definition of taxable events, including new asset classes as taxable,” he stressed and noted that the Government could only set tax rates and deadlines.