The Brazilian Congress is currently debating a provisional measure that could transform cryptographic taxes in the country, and not necessarily for the better. If approved, the reform would place a fixed tax of 17.5% in all cryptography profits, no matter how large or small.
According to Fabio Plein, Regional Director of Coinbase for the Americas, the proposed measure would represent a significant setback for small -scale retail investors. Meanwhile, the high value of the network can win.
What is provisional measure 1303/25?
In June, the Federal Government of Brazil promulgated the provisional measure 1303/25 to simplify the tax treatment of several financial instruments, including cryptocurrencies.
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This new provisional measure allows the Brazilian government to replace its current progressive progressive progressive tax system with a fixed rate of 17.5%. This change temporarily abole the anterior staggered structure, taxing the profits from 15% to 22.5% depending on the size.
In addition, the measure deletes the existing exemption for all cryptographic transactions worth less than R $ 35,000, or approximately $ 6,500. It also stands the tax treatment of cryptographic assets, regardless of where they are maintained. The flat rate also applies to Autocustody wallets and the accounts on the high seas.
The Government promulgated this measure to address a significant income deficit and help fulfill its fiscal objective. This legislation responded directly to a previous political setback where Congress had revoked the government attempt to increase the tax on financial transactions (IOF).
By introducing this new tax, Brazil aims to compensate for lost income and achieve its objective of a zero deficit in 2025. However, the future of the measure is not yet sure. Congress will soon vote on whether it is a permanent law.
“There are at least fifteen amendments proposed with respect to cryptography destined to correct these distortions, and a vote between September and October is expected. If the MP is not approved, it will not become law, and the proposed rules will not apply. If approved, it will come into force [on] January 1, 2026, “Fabio Plein told Beinyptto.
However, these changes in cryptographic taxes could take Brazil’s innovation away, a traditionally dominant country in the industry.
Crypto vs. Values: A disparity in treatment
The reaction of the Brazilian cryptographic community to the provisional measure 1303/25 has been predominantly negative. According to Plein, the legislation depends on the false idea that cryptography is exempt from taxes in Brazil.
“A persistent, but incorrect narrative, states that cryptography does not pay taxes,” although the sector already has corporate taxes (Corporate Income Tax, CSLL, PIS, COFINS), existing retention obligations and progressive rates of the end user of 15% –22.5% on national and 15% operations in international, “said Plein.
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Although the measure seeks to unify taxes in a wide range of investment values, he added that Crypto is at a disadvantage compared to values.
“Compared to values, Crypto is worse: values would enjoy a quarterly exemption of R $ 60,000, and investors not residing in values would not face the retention tax (WHT),” he explained.
Meanwhile, the flat rate tax, combined with the elimination of the monthly minimal exemption, has a huge impact on smaller investors.
Who will benefit from tax changes?
According to the provisional measure, the abolition of the monthly exemption of R $ 35,000 for cryptographic transactions triggers a calculation of capital gains for each purchase or sale. Plein compared the notion with a tax now disappeared in Brazil known as the provisional contribution of financial transactions (CPMF).
Promitated in 1997, the CPMF was a tax raised in almost all financial transactions, including withdrawals and transfers of bank accounts. The measure was widely criticized for its cascade effect and impact on casual investors. Due to public discontent and political pressure, the rule expired in 2007.
“While this is still the income tax in capital gains, tax each small transaction without taking into account the ability to pay effectively creates a kind of ‘CPMF in each click’: buying a bread bar using crypto should not turn someone into a merchant,” said Plein.
Plein argued that the new flat rate goes against the government’s statement not increasing taxes. Eliminates the monthly exemption and increases the floor tax from 15% to 17.5%.
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Paradoxically, this same provisional measure is more beneficial for high network individual individuals.
“Although framed as pointing to ‘the super rich’ … 17.5% fixed reduces the upper rate (previously to 22.5%) while increasing the effective load for smaller investors, a result in disagreement with equity expectations,” Plein to BeinCrypto told.
The provisional measure also introduces a new retention income tax (WHT) in cryptographic activities, adding another layer of controversy.
Tax yield and liquidity
Wht is a tax taken directly from a person’s profits before receiving money. Applied to cryptography, this new tax affects activities such as “Defi-As-A-Service” and “Appearance as a service” offered by centralized platforms.
Such tax could force platforms to sell the cryptographic assets of a client to pay the tax invoice. According to Plein, this approach is defective because it combines the principles of a tax on wealth with an income tax.
This new tax also extends to non -resident investors and liquidity suppliers, a measure that is considered a great competitive disadvantage. Traditional values in Brazil would remain exempt from this tax for non -resident investors, which could lead to foreign capital to flow outside the cryptography market and other financial assets.
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Plein worried him that the movement could push users towards less regulated platforms.
“The introduction of WHT is likely to push users towards decentralized solutions and self -opposite.
Plein worries that doing this permanent measure could be catastrophic in a country where cryptography thrives.
A global leader at a crossroads
Brazil has one of the highest cryptographic adoption rates in the world. Many of their citizens use cryptographic not only for speculative investment but also for daily transactions and as a coverage against inflation.
“With approximately 25 million Brazilians (approximately 16% of the population) already participating and an expectation of 70 million users by 2026, Brazil is the seventh largest market in the world,” said Plein.
The high level of adoption means that the new fiscal measure could deeply affect the national economy. The current debate in Congress is not only about the fiscal law, but also the future of an industry that grows rapidly that creates jobs and attracts investment.
“Get this [provisional measure] Correct is … about promoting innovation, investment and jobs in Brazil instead of abroad, “added Plein.
If this measure encourages a more mature market or discourages future growth, the final decision of the Congress will have a lasting impact on Brazil’s position on the global cryptographic economy.
