Until then, there was no legal mechanism obligating taxpayers to "account for" their transactions with "digital currencies" to the tax authorities, thus opening a vast field for illicit operations. Therefore, in order to curb the misuse of this type of asset, the Brazilian Federal Revenue Service issued IN RFB 1.888/2019, which establishes the obligation to provide information on transactions involving these assets.
According to the Normative Instruction, "information must be provided whenever the monthly value of transactions, individually or collectively, exceeds R$ 30 thousand".
From the news article:
Starting in August of this year, individuals, legal entities, and brokers that conduct transactions with crypto-assets (popularly known as "virtual currencies") will have to provide information to the Federal Revenue Service through a system available at the Virtual Service Center – e-CAC. The set of information sent electronically must be digitally signed using a valid digital certificate issued by an entity accredited by the Brazilian Public Key Infrastructure – ICP-Brasil.
The collection of information on cryptocurrency transactions has intensified in several countries, following the discovery that groups were using the system to commit crimes such as money laundering, tax evasion, and financing arms trafficking and terrorism.
Because cryptocurrency transactions can be conducted outside the traditional financial system and anonymously, criminal gangs are allegedly taking advantage of this to commit crimes. One of the best-known cases occurred in 2017, when a cyberattack on British hospitals prevented the use of the medical institutions' computers. To regain access to the computers, the hospitals were forced to pay the virtual kidnappers a ransom using cryptocurrencies, as they are more difficult to trace.
Published in the edition of Tuesday, May 7th, of the Official Gazette of the Union, the Normative Instruction RFB 1.888/2019 It is stipulated that transactions carried out in environments provided by cryptocurrency exchanges domiciled in Brazil will be reported by the exchanges themselves, without any value limit. These exchanges function as brokers in the cryptocurrency market, allowing the buying and selling of virtual currency between users, among other operations.
Transactions carried out on foreign exchanges and transactions carried out between individuals or legal entities without the intermediation of brokers will be reported by the individuals and legal entities themselves. In these cases, information must be provided whenever the monthly value of the transactions, individually or collectively, exceeds R$ 30 thousand.
The following information must be provided: the date of the transaction, the type of transaction, the holders of the transaction, the crypto assets used in the transaction, the quantity of crypto assets traded, the value of the transaction in Brazilian reais, and the value of any service fees charged for executing the transaction, also in Brazilian reais, if applicable. The normative instruction also stipulates the amount of fines for cases of providing incorrect information or information submitted after the deadline.
Source: ITI – National Institute of Information Technology
