The Brazilian government has eliminated the tax exemption for small-scale cryptocurrency investors. The government introduced a 17.5% flat tax on all cryptocurrency capital gains on June 11. It published this policy under Provisional Measure 1303, also known as MP 1303.
Brazilian residents who sold up to R$35,000 or AU$9,696 worth of crypto monthly were exempt from income tax previously. The government taxed profits above this threshold progressively, starting at 15% and reaching up to 22.5% for volumes over R$30 million or AU$8.32 million.
Regardless of transaction volume, the new measure removes all exemptions and applies equally to all investors. According to Portal do Bitcoin, a Brazilian news outlet, large investors may see lower tax bills under the new system. However, small traders now face higher taxes.
MP 1303 will also cover crypto assets held outside exchanges or in foreign jurisdictions. Investors must report profits quarterly and may offset losses using gains from the previous five quarters. This timeframe will shorten starting in 2026.
Under the real and presumed profit regimes, the rules for companies remain unchanged. These entities still cannot deduct losses from crypto asset operations.
Fixed-income products Agribusiness Credit Letters, Real Estate Credit Letters, Real Estate Receivables Certificates, and Agribusiness Receivables Certificates will now suffer a 5% tax on profits in addition to crypto. Moreover, taxes on revenues from online betting operators will rise from 12% to 18%. This is even though taxation on better prizes awarded remains unchanged.
These changes follow the withdrawal of a proposed hike in the Financial Operations or IOF Tax, which faced backlash from Congress, as well as financial markets. The Ministry of Finance introduced MP 1303 as an alternative approach to raise tax revenue.
