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Brazilians taxpayers possessing bitcoins – a new digital currency – will now need to provide information to the Federal Revenue Bureau of Brazil, and, in some cases, pay Income Tax.
The Brazilian Tax Authority decided that this currency “is equivalent to financial assets for tax purposes”. Therefore, taxpayers owning bitcoins must declare it as “other assets” when the total amount exceeded R$ 1.000 (US$ 452) or more at the end of 2013.
The Brazilian Tax Authority will collect an Income Tax of 15% on the capital gains earned from transactions with bitcoins that exceeded R$ 35.000 (US$ 15.837). Furthermore, the new regulation applies to all trades performed in the last five years and taxpaypers that didn’t declare those capital gains will incur in penalties and interests.
Bitcoin currency, launched in 2009, is a currency that only exists in the digital world and doesn’t have any control or warranty by the state or financial system.
Problems related to this payment method led several countries to discuss how to protect customers and avoid its use in criminal activities. Brazil, for the moment, adopted similar measures to the U.S., which also decided that this currency must be taxed and declared.
The Federal Revenue Bureau of Brazil concluded that is possible to charge a tax and to collect information without modifying the current regulation. The Tax Authority classifies bitcoins as an equivalent to a financial asset only for tax collection purposes. For other legal purposes, bitcoins will not be considered like a currency, a security or even a financial asset, according to the Federal Revenue Bureau of Brazil.
Brazilian Tax Authority also created a working group on electronic transactions to monitor the market evolution and verify the need to create new measures. Currently, the main challenge for the authorities is to gather information regarding bitcoins transactions.
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