Disclosure of Domestic Cryptocurrency Transactions in Brazil are now Compulsory

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Starting from this month, Brazilian citizens have to report cryptocurrency transactions to the competent authority compulsorily or will run into sanctions, according to a press release, August 1, 2019

Declaring Digital Currency

Brazil has just made it illegal to not disclose data regarding cryptocurrencies transaction to Tax Authorities. As previously announced by Brazil’s National Treasury back in May 2019, from the first day of August, Brazilians must provide the Federal Treasury the information regarding buying or selling operations involving digital currencies.

The Brazilian crypto market is one of the most flourishing in South America. According to The Rio Times, the Federal Treasury values the domestic cryptocurrency market as much as R$8 billion with around 800,000 people involved, even more than the Sao Paulo Stock Exchange, the main financial square of the country.

The compulsory disclosure of cryptocurrency trading information is defined by the Normative Instruction RFB 1.888/2019 which applies not only to individuals but to companies and other intermediaries as well. Data disclosure must be carried out on a monthly basis, therefore the first register will be developed in September based on the August collection.

The new rule has been followed by two executive acts release in June that include a layout and system completion guidance to correctly hand out the information to the authorities in charge.

Sanctions and Rationale

According to the Normative, trading data must be declared whenever the monthly generated volume exceeds R$30,000 (roughly €6,750). Volume must include any operation including purchase, sale, exchange, donation, and transfer of digital assets among others. Under the rules, information must be delivered before the last working day of the month in which the activities have been conducted. Not following the new compulsory reporting duty can lead to penalties ranging from R$100 to R$500 and up to 1.5% of the undisclosed amount.

The Federal Treasury thinks these types of data recordings are becoming a worldwide trend and is increasing due to some people using digital currencies to undertake criminal activities such as money laundering, tax evasion, drug dealing, and weapon trafficking.

According to local cryptocurrency media Livecoins, Brazilian authorities are also looking to regulate exchanges based inside the country. 

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