Paulo Guedes wants to create ‘DigiTAX’, a tax for all transactions with Bitcoin and cryptocurrencies

The Minister of Economy, Paulo Guedes, did not give up on the proposal to create a tax on digital transactions and returned to talk about the creation of a new tax in Brazil, during the event “Brazil’s Economic Perspectives” promoted by Arko Advice along with the CT.

According to Guedes, the internet helped to create a ‘Virtual Camelódromo’, in which companies based in other countries sell their products to Brazilians and, therefore, do not pay taxes due in the country, as is the case, according to Guedes, of Chinese e-commerce companies.

Guedes even declared that these companies can even use Bitcoin and cryptocurrencies as a way of ‘leaving no trace’, however, none of the main Chinese e-commerces like Alibaba, Aliexpress, BangGood, Cigabuy, Mini in the box, Deal Extreme, Wish or Shein accept cryptocurrencies as a form of payment.

“The first angle I wanted to explore is this, the world is changing fast, the guys are really dumping the virtual camelódromo, it really exists, it’s a massive invasion and even using it, it seems that liquidations are made in bitcoins, which it is to have no traces.”, said the minister.

Guedes then stated 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, which 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.

Digital tax has already been ‘vetoed’ in Congress

Since taking over as Minister of Economy in the Government of President Jair Bolsonaro, Paulo Guedes has defended the creation of a new tax to tax digital transactions. This new tax came to be called by the press the “New CPMF” and, after much debate and political attrition, in May 2021, Guedes said he had given up on the proposal.

“This [transaction] tax has been banned. I won’t fight for him. We are in a democracy. Leave it alone. Continue with the high charges and we will carry out the much-desired extensive reform”, he said at the time.

However, in November of last year, the subject came up again when the special secretary of the Federal Revenue, José Tostes Neto, returned to the subject and stated that it was necessary to create a tax that would have an impact on financial operations, especially those carried out with Bitcoin, cryptocurrencies, cashback, frequent flyer programs, among others, which, according to him, are operations that are outside the system without any regulation.

“Today, there is no longer commerce only in the traditional way. I use digital currency, I use cashback, I use a frequent flyer program to buy a lot of things. I don’t buy with traditional money. So this cannot fail to be considered if we are discussing how a new taxation can be levied”, declared

On the occasion, Tostes Neto stated that at no time did the government completely give up on creating a tax for digital transactions and was just waiting for the right moment to put the issue up for debate again.

“The government is watching closely to enter the debate at an opportune moment.” she said.

Like Guedes, Tostes Neto has defended the creation of a tax for Bitcoin transactions since 2019, when the first data on cryptocurrency transactions began to be computed by the Federal Revenue Service thanks to Normative Instruction 1888.

In 2019, the government also began to write the text of the so-called Tax Reform (which stalled both in Congress and in the Government) and, in it, from the beginning, the need to create a tax for digital transactions, with cryptoassets included in this new scope of taxation.

At the time, José Tostes, who accompanied the meetings of the Finance Policy Council (Confaz), declared that the tax proposed by the Government would in no way leave cryptocurrencies out.

Although Guedes has declared that he wants to create a tax on cryptocurrencies in Brazil, for this to happen he needs the approval of the National Congress (senator and deputies), however, the current proposal to regulate the crypto-assets market in the country does not mention the creation of taxes for the sector.