The Brazilian government has announced new tax rules for cryptocurrencies held both in the country and abroad. A Provisional Measure published on June 11 derogates the previous tax regime that established a lower floor for paying taxes linked to digital assets, and establishes a flat fee for all income derived from holding or trading these assets.

Provisional Measure 1,303 establishes that these gains will pay a flat fee of 17.5% as income tax, without exception. Before, crypto income was taxed only if the amount exceeded 35,000 reais (nearly $6,320) and was lower than 5 million reais (nearly $900,000) at 15%, 17.5% for volumes between 5 million reais and 10 million reais ($1,800,000); 20% for the range between 10 million and 20 million reais ($3,600,000); and 22% for volumes above 30 million reais ($5,400,000).

The measure points out that “all income, including net gains, obtained from transactions with virtual assets, including financial arrangements with virtual assets that are the digital representation of value negotiated or transferred by electronic means and used for payment or investment purposes” are included in this new regime.

In the same way, the document includes transactions and income produced by crypto held in self-custody wallets in its scope. This hints at the taxation of decentralized finance activities. Nonetheless, it doesn’t explain how this process will be carried out or how the relevant authorities will be able to tax these operations.

The calculation of these taxes will be made every quarter, and traders will be able to deduct previous losses. The measure comes as there is a public debate about the hike of the so-called financial transaction tax, and legislators were considering including crypto assets under the law’s umbrella to offset the increase to the cryptocurrency industry and its users.

Read more: Brazil Mulls Taxing Cryptocurrency to Offset Financial Transaction Tax Hike

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