Brazil readies tweaks on tax rules for crypto sales, day trading, say sources

BRASILIA, April 2 (Reuters) - The Brazilian government will send a bill to Congress that seeks to tweak tax rules on financial investments, including lowering the burden on day traders and setting levies over cryptocurrency profits, two sources with knowledge of the matter told Reuters.

The measure is part of a government effort to reform income taxes that began last year with the approval of new rules on closed-end and offshore funds. A broader bill changing the rules for income taxes on individuals and companies is expected to be submitted later to Congress.

Among the goals of the bill, which was drafted by the Finance Ministry, is to establish clear definitions for the taxation of virtual assets.

The idea is to apply to these assets, including cryptocurrencies, the same taxation rule used for financial investments when the digital asset is classified as a financial investment.

"Other virtual assets, such as digital works of art and NFTs, would continue to be taxed on capital gains," said one of the sources, on condition of anonymity.

The finance ministry did not respond to a request for comment.

The bill would also reduce the tax rate over profits from day trading operations to 15%, from 20% currently, to match the same rate for stock transactions not classified as day trade.

"We see no technical basis for having different rates in these two situations, in favor of the principle of equality (before the law) and neutrality that govern tax policies," one of the sources said.

In another portion of the text, the Brazilian government will propose clearer rules for defining tax havens, seeking to close loopholes allowing tax evasion.

Brazilian legislation defines a tax haven as a country that taxes income at a rate of less than 20%.

The bill would define new characteristics for places to be classified as tax havens, such as countries that impose secrecy on information on owners and shareholders of foreign companies investing in Brazil. (Reporting by Bernardo Caram; Writing by Peter Frontini; Editing by Muralikumar Anantharaman)