As Cointelegraph Brazil reports today, transactions involving cryptocurrencies such as Bitcoin (BTC) must be reported to the IRS in accordance with rules established by Normative Instruction 1,888 introduced in May 2019.
As reported by national public news agency Agência Brasil, the new measure applies to individuals, companies and brokerages, and includes all kinds of crypto-related activities, including buying and selling, as well as donations, barters, deposits, withdrawals and others.
The measure requires entities to provide monthly reports by the end of the month following the month when crypto-related transactions occurred, the report notes. As such, the information for the month of August should be provided until the last business day of September.
According to the rules, local crypto exchanges will have to inform the IRS about all the operations regardless of value. However, those who use foreign exchanges or brokerages, or make peer-to-peer transactions in crypto, will have to report on the transactions if the monthly amount exceeded 30,000 Brazilian reais ($7,800), Cointelegraph Brazil reports.
Penalties range from 1.5% to 3% of the amount of unreported transaction
Those who fail to report on their Bitcoin transactions will face penalties ranging from 100 to 500 Brazil reais or from $25 to $130. The IRS is also authorized to charge from 1.5% to 3% of the amount of the unreported transaction as a penalty, according to Agência Brasil.
The IRS believes that digital currency market in Brazil has more investors than Brazil’s second oldest stock exchange, B3, which reportedly has about 800,000 customers. By applying the measure, the authority intends to combat illicit activities such as money laundering, tax evasion and terrorist financing on Bitcoin, the report notes.
Recently, head of the Federation of Industries of the State of São Paulo expressed concerns that Brazilians could start using crypto to evade taxes.