Brazil to end tax exemption for small cryptocurrency transactions, fully implement single 17.5% tax rate

The Brazilian government has abolished an income tax exemption for small cryptocurrency transactions and implemented a new tax system that applies a flat 17.5% rate on all digital asset income.
On the 15th (local time), Brazil enacted Provisional Measure 1303 (Provisional Measure 1303) as part of the government's strategy to expand financial market taxation and secure tax revenue.
Previously, Brazilian residents who sold crypto assets worth up to 35,000 reals in a month were exempt from income tax, and the excess amount was subject to transaction regulations.
Previously, the tax rate ranged from 15% to a maximum of 22.5% depending on the type of transaction. However, with the latest revision, a flat tax rate of 17.5% will be applied to all investors from June 12th, with no exceptions regardless of transaction amount.
According to local media Portal do Bitcoin, the move will result in smaller investors bearing a higher tax burden than before, but will not affect larger traders or the wealthy.
For example, instead of the previous system in which transactions over 5 million reais were subject to a maximum tax of 22.5%, the tax rate will be a flat 17.5%.
This temporary measure does not merely change the tax rate, but also expands the scope of taxation.
The tax will be applied quarterly, and investors will be able to offset losses from up to the past five quarters.
However, the loss offset period is scheduled to be shortened from 2026.