Taxpayers in Brazil have only a couple of days left to file their annual tax returns. Investors who had more than 5,000 reals worth of cryptocurrency in 2020, a little less than $1,000, are obliged to report the funds on their income tax declarations this year. Brazilians who fail to do that on time face hefty fines.

Deadline for Tax Filing in Brazil Expires Midnight May 31

Brazilian citizens are required to file their 2021 income tax returns before June 1. This year, the deadline was extended by a month due to the coronavirus pandemic which took a heavy toll on South America’s largest economy. Failure to report revenues and tax obligations will result in fines starting at around $30 and going up to 20% on the tax due, Portal do Bitcoin warned readers recently.

Brazilians Who Held $1,000 in Crypto Last Year Must Report It on Tax Returns by End of May

Taxpayers who kept over 5,000 reals worth of coins in their wallets, or $960 at the current exchange rate, must report the crypto holdings to Receita Federal, the country’s internal revenue service. This year, the tax agency adopted dedicated codes on the assets and rights form for bitcoin (BTC) – 81, other cryptos such as ETH, BCH, XRP, and LTC – 82, and digital tokens – 89.

Although Brazilians are obliged to report the cryptos, not all of them will have to pay tax as it’s levied at capital gains exceeding the monthly exemption limit of 35,000 reals (approximately $6,700). Crypto profits above the threshold will be charged with capital gains tax according to a progressive scale, the news outlet elaborated.

Brazilians Who File Their Tax Declarations on Time Will Avoid Penalties

Submitting a declaration that’s not completely correct is the lesser evil than missing the deadline. Brazilians who have reported their assets on time are allowed to make corrections later, but those who fail to lodge their tax returns before June 1 will be facing penalties. And citizens that deliberately evade taxation can be fined up to 150% on the tax amount. Ana Paula Rabello, who specializes in crypto accounting, has been quoted saying:

A taxpayer who has not filed their declaration yet needs to remain calm and do nothing hastily to avoid the risk of paying more or less tax. What needs to be done now is to immediately start preparing the information.

The timely filing of the tax return is essential, Rabello stressed, or taxpayers will have issues with banks and the revenue service if they attempt to use unreported cryptocurrency. “Crypto investors must always remember that undeclared bitcoin cannot be used,” warned the accountant who has provided other tax tips in a free e-book published by Portal do Bitcoin, in which Rabello advises Brazilians how to report their crypto holdings on the 2021 income tax return.

Source: https://news.bitcoin.com

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