Reuters reported that the Brazilian tax authority is expected to summon overseas cryptocurrency exchanges to explain their business operations and cooperation with local service providers, aiming to prevent potential illegal activities and obtain financial information about local users in order to enforce the “overseas investment income tax” passed last year.
The Brazilian government revealed that the Federal Revenue Service will issue an ordinance this week and will call overseas exchanges that provide cryptocurrency trading services in Brazil to understand their operations in the country and confirm whether their citizens are complying with the new tax laws.
According to Andrea Chaves, Deputy Director of the Federal Revenue Service’s Surveillance Department, their main focus is on how exchanges operate in Brazil to clarify any illegal activities.
On the other hand, Wagner Lima, Director of the Risk Management Department of the Revenue Service, hopes to understand the details of the cooperation between these exchanges and domestic service providers and to obtain financial and tax information of the Brazilian people.
Currently, only local cryptocurrency exchanges have the obligation to report transactions, but it is expected to soon expand to offshore exchanges.
A previous report by Kaiko Research showed that the main overseas exchanges operating in Brazil and with Portuguese language websites targeting local users are Binance, OKX, Coinbase, and KuCoin.
The report also revealed that despite Binance being the largest exchange in Brazil, its market share has decreased from 95% two years ago to 79%, gradually being replaced by the local exchange Mercado Bitcoin and Mexico’s Bitso.
The volume of cryptocurrency trading in Brazil, denominated in BRL, increased by 30% compared to the same period last year, making it the largest cryptocurrency market in Latin America and the seventh largest globally.
Stablecoins are also popular in the Brazilian market, accounting for slightly over 50% of the trading volume, surpassing Bitcoin and Ethereum by about 45%.
According to local tax authorities, Brazilian citizens reported 133.6 billion BRL (approximately 24 billion USD) worth of cryptocurrency assets in the first half of last year, showing a 36.6% increase from the same period last year. Of this, 14.5 billion BRL (approximately 2.61 billion USD) was reported through overseas exchanges, representing a 51.2% growth, indicating the government’s efforts to implement tax collection.
To address this situation, the Brazilian authorities passed a tax bill in December last year, imposing a 15% income tax on the profits and interest earned by Brazilians from cryptocurrency trading on overseas exchanges.
The article also mentioned that OKX recently launched exchange and Web3 wallet services in the Netherlands, and a hacker managed to steal 5 million RMB in 15 minutes, causing panic among users.