This article is from cointelegraph.com.br and the original article can be read here in Portuguese
It is not new that the Brazilian tax burden, a tangle of municipal, state and federal taxes, weighs directly on the shoulders of citizens. This year, from January to early May, Brazilians have already paid more than R$1 trillion in taxes, according to calculation by the Commercial Association of SĂŁo Paulo (ACSP).
The impressive amount corresponds to the total paid to the Union, states and municipalities in the form of taxes, fees, fines and contributions. According to the institution itself, high inflation, currently above 10% per year, contributes to even greater collection, as the higher the price, the higher the tax.
The lawyer, professor and Doctor in Tax Law André Félix Ricotta de Oliveira, partner at Félix Ricotta Advocacia, points out some reasons that make the tax burden so high in Brazil.
“In 1988, when the Federal Constitution was promulgated, the Brazilian tax burden was around 22 to 23 percent of GDP. Then, over the years, the public administration grew a lot and, with the mismanagement of public resources, the tax burden rose to unbearable rates. Today, this number is above 35% of GDP, so one of the biggest reasons for the increase in the country’s tax burden is poor public administration”, points out AndrĂ©.
According to the professor, if with this amount of revenue, governments acted for a proportional return on excellent public services, the tax burden could be a little fairer.
“The problem is that there are other injustices, because our tax burden does not respect the principle of ability to pay, penalizing precisely those who have less financial and contributory capacity”.
In the expert’s opinion, this tax equation has little chance of being changed in the short term.
“The right thing should be to carry out a broad administrative reform before the tax reform, to see what the cost of the State is and how this money should be better spent”, he concludes.
Federal government still wants more taxes
However, despite the trillion-dollar collection, the Federal Government still wants Brazilians to pay more taxes and, for that, regulators are turning their eyes to the crypto asset market.
The Minister of Economy, Paulo Guedes, recently declared that the government has not abandoned the proposal to tax digital transactions and, especially, transactions made with cryptocurrencies. According to him, the Ministry has been working to create a tax for payments with Bitcoin, what he called, in a joke, DigiTAX.
“DigiTAX will appear right away, to equalize the game. There are countries that are thinking of putting a very high tax on Bitcoin right away, charging tax beforehand. Our team is working on it, we recognize that there is a digital dimension that will escape conventional controls, but that really worries us.”, he said.
Who also wants to increase tax collection through negotiations made in the crypto-assets ecosystem is the IRS, which stated that there is also an incidence of taxes on profit in negotiations between cryptocurrency pairs, for example, BTC/ETH.
“the capital gain calculated on the sale of cryptocurrencies, when one is directly used in the acquisition of another, even if the acquisition cryptocurrency is not previously converted into reais or another fiat currency, is taxed by the individual’s income tax”.
However, it should be noted that not all crypto investors need to declare their trades to the IRS, as the regulator establishes that they must only pay income tax to investors who trade more than BRL 35,000 in cryptocurrencies.
In the case of the possible new tax by Guedes, there is still a long way to go for the proposal to go when it is sent to the National Congress, however, in the case of the Federal Revenue, the tax on profit in negotiations between cryptocurrency pairs is already valid for the Tax on Income Tax. Income to be declared by the end of May.
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