Brazil’s Congress is at the moment debating a provisional measure that might doubtlessly remodel crypto taxation within the nation—and never essentially for the higher. If handed, the reform would place a flat 17.5% tax on all crypto beneficial properties, nevertheless massive or small.
In response to Fabio Plein, Coinbase’s Regional Director for the Americas, the proposed measure would symbolize a major setback for retail and small-scale traders. In the meantime, high-net-worth people stand to realize.
What’s Provisional Measure 1303/25?
In June, Brazil’s federal authorities enacted Provisional Measure 1303/25 to simplify the tax remedy of varied monetary devices, together with cryptocurrencies.
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This new provisional measure permits the Brazilian authorities to interchange its present progressive crypto tax system with a flat 17.5% fee. This modification quickly abolishes the earlier tiered construction, taxing beneficial properties at 15% to 22.5% relying on measurement.
As well as, the measure erases the prevailing exemption for all crypto transactions price beneath R$35,000, or roughly $6,500. It additionally standardizes the tax remedy of crypto belongings, no matter the place they’re held. The flat fee applies equally to self-custody wallets and offshore accounts.
I don’t know who wants to listen to this, however governments are coming to your crypto beneficial properties.
🇧🇷 Brazil: 17.5% tax on all earnings
🇵🇹 Portugal: 28% tax launched
🇬🇧 UK: Allowance slashed in half
Retail traders had a grey zone.
That period is closing quick. pic.twitter.com/KRkhpw0VPO
— PrimeX BTC (@PrimeXBitcoin) August 25, 2025
The federal government enacted this measure to handle vital income shortfalls and assist meet its fiscal goal. This laws instantly responded to a earlier political setback the place Congress had overturned the federal government’s try to extend the Monetary Transactions Tax (IOF).
By introducing this new tax, Brazil goals to offset misplaced income and obtain its purpose of a zero deficit in 2025. Nonetheless, the measure’s future will not be but sure. Congress will quickly vote on whether or not to make it a everlasting regulation.
“There are at least fifteen proposed amendments regarding crypto aimed at correcting these distortions, and a vote is expected between September and October. If the MP is not approved, it will not be converted into law, and the proposed rules will not apply. If approved, it will enter into force [on] January 1, 2026,” Fabio Plein instructed BeInCrypto.
Nonetheless, these adjustments in crypto taxation might drive innovation away from Brazil, a historically dominant nation within the trade.
Crypto vs. Securities: A Disparity in Therapy
The response of the Brazilian crypto neighborhood to Provisional Measure 1303/25 has been predominantly unfavorable. In response to Plein, the laws hinges on the false concept that crypto is exempt from taxation in Brazil.
“A persistent, but incorrect, narrative claims crypto ‘does not pay taxes,’ even though the sector already bears corporate taxes (Corporate Income Tax, CSLL, PIS, COFINS), existing withholding obligations, and progressive end-user rates of 15%–22.5% on domestic operations and 15% on international ones,” Plein stated.
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Although the measure seeks to unify taxation throughout a broad vary of funding securities, he added that crypto is at an obstacle in contrast with securities.
“Compared with securities, crypto is treated worse: securities would enjoy a R$60,000 quarterly exemption, and non-resident investors in securities would not face withholding (WHT) income tax,” he defined.
Within the meantime, the flat fee tax, paired with the elimination of the month-to-month minimal exemption, bears an outsized impression on smaller traders.
Who Stands to Profit From the Tax Modifications?
Below the provisional measure, abolishing the R$35,000 month-to-month exemption for crypto transactions triggers a capital-gains calculation for each buy or sale. Plein in contrast the notion with a now-defunct tax in Brazil often known as the Provisional Contribution on Monetary Transactions (CPMF).
Enacted in 1997, the CPMF was a tax levied on almost all monetary transactions, together with withdrawals and transfers from financial institution accounts. The measure was extensively criticized for its cascading impact and impression on informal traders. Because of public discontent and political stress, the rule expired in 2007.
“While this remains income tax on capital gains, taxing each small transaction without regard to ability to pay effectively creates a sort of ‘CPMF at every click’: buying a loaf of bread using crypto should not turn someone into a trader,” Plein stated.
Plein argued that the brand new flat fee goes towards the federal government’s declare to not elevate taxes. It removes the month-to-month exemption and will increase the ground tax from 15% to 17.5%.
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Maio 2025 – Pode declarar suas cryptos. Isentas até 35K. 👍
Junho 2025 – MP dos impostos.
2026 – Pague 17.50% aqui do seu lucro. Boleto emitido
— Rafael Gloves (@rafaelgloves) June 12, 2025
Paradoxically, this similar provisional measure is extra useful for high-net-worth people.
“Although framed as targeting ‘the super-rich’… a flat 17.5% reduces the top rate (previously up to 22.5%) while increasing the effective burden on smaller investors, an outcome at odds with expectations of fairness,” Plein instructed BeInCrypto.
The provisional measure additionally introduces a brand new Withholding Revenue Tax (WHT) on crypto actions, including one other layer of controversy.
Taxing Yield and Liquidity
WHT is a tax taken instantly from an individual’s earnings earlier than receiving the cash. Utilized to crypto, this new tax impacts actions like “DeFi-as-a-service” and “staking-as-a-service” provided by centralized platforms.
Such a tax might obligate platforms to dump a consumer’s crypto belongings to pay the tax invoice. In response to Plein, this method is flawed as a result of it combines the ideas of a wealth tax with an revenue tax.
This new tax additionally extends to non-resident traders and liquidity suppliers, a transfer that’s thought of a significant aggressive drawback. Conventional securities in Brazil would nonetheless be exempt from this tax for non-resident traders, which might result in overseas capital flowing out of the crypto market and into different monetary belongings.
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Plein fearful that the transfer might push customers towards much less regulated platforms.
“Introducing WHT is likely to push users toward decentralized solutions and self-custody. WHT on non-resident investors may reduce liquidity and generate price distortions reminiscent of the ‘kimchi premium,’ similar to what happened in South Korea,” he stated.
Plein worries that making this measure everlasting might show catastrophic in a rustic the place crypto thrives.
A International Chief at a Crossroads
Brazil has one of many highest crypto adoption charges on the planet. A lot of its residents use crypto not only for speculative funding but additionally for on a regular basis transactions and as a hedge towards inflation.
“With roughly 25 million Brazilians (about 16% of the population) already participating and an expectation of 70 million users by 2026, Brazil is the world’s 7th-largest market,” Plein stated.
The excessive adoption stage means the brand new tax measure might profoundly have an effect on the nationwide financial system. The present debate in Congress isn’t nearly tax regulation but additionally about the way forward for a shortly rising trade that creates jobs and attracts funding.
“Getting this [provisional measure] right is… about fostering innovation, investment, and jobs in Brazil rather than abroad,” Plein added.
Whether or not this measure fosters a extra mature market or discourages future development, Congress’s ultimate determination can have an enduring impression on Brazil’s place within the world crypto financial system.
