Brazilian lawmakers are gearing up to debate the future of cryptocurrency taxation. Local reports indicate that, due to the relevance of the issue, the Brazilian Congress is set to discuss the legality of a Provisional Measure issued by President Luiz Inácio Lula da Silva in June, which significantly expanded the target for these taxes.

The Provisional Measure eliminated some exemptions for small cryptocurrency trading compared to the old taxation scheme, which only taxed numbers over 35,000 reais (nearly $6,320). Now, with the new scheme, all crypto trading activities will be taxed at a 17.5% flat fee, regardless of the sums traded.

The matter will become urgent on July 26, meaning that all discussions will be paused until the proposal is debated and either approved or repealed. A hearing is scheduled for August 6th to debate this proposal, which must be confirmed within 120 days of its enactment to maintain its validity. The deadline for this decision is October 8; if the measure is not approved by then, it will lose its validity.

The measure, which potentially involves taxing assets under self-custody and decentralized finance activities, has been heavily criticized, with some deputies even introducing proposals to repeal it due to its alleged illegality.

Nonetheless, local media reports indicate that there is still no consensus on the Brazilian Congress’s position on this issue, and intense discussions are expected to happen in the coming months.

The tax expansion comes at a time when the Brazilian government needs to hike the so-called financial transaction tax and aims to increase the funds obtained from cryptocurrency traders to offset the proposed hike.

Read more: Brazilian Authorities Terminate Exemptions, Aims to Tax Crypto Held in Self Custody

Read more: Brazil’s Congress up in Arms Against ‘Flawed’ Cryptocurrency Tax Decree

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