The Brazilian tax authority has reported identifying cryptocurrency irregularities in more than 25,000 tax statements. After a country-wide investigation, the institution detected that 25,126 individuals who possessed at least 0.05 BTC failed to include these holdings in its income tax statements, opening the doors for receiving fines or being charged for crimes against the tax system.

Brazilian Tax Authority (RFB) Investigation Reveals Significant Crypto Tax Non-Compliance

The Brazilian tax authority, Receita Federal do Brasil (RFB), is strengthening the oversight of cryptocurrency tax. According to local reports, the institution detected irregularities in more than 25,000 tax statements from taxpayers who held at least 0.05 BTC in their wallets but did not disclose it. Adding all the irregularities, it is estimated that at least 1.06 billion reais ($213 million) worth of bitcoin went undeclared.

The investigation that led to these findings combined traditional and artificial intelligence techniques to identify these taxpayers who omitted their crypto holdings from their statements. Furthermore, the institution identified 181 statements submitted by citizens abroad and might be exempt from presenting these statements, depending on certain conditions.

The omission in declaring assets in Brazil can be charged with a penalty of six months to two years in prison and a fine. Leonardo Roesler, a tax lawyer and partner at RMS Advogados, remarked on the dangers of these practices for taxpayers. He told Valor Economico:

The absence of a correct declaration of cryptocurrencies poses significant risks to taxpayers, including the possibility of fines, fines, and in more serious cases, the imputation of a crime against the tax system.

Arthur Barreto, another tax lawyer, explained that due to the data reporting obligations that the tax authority has imposed on crypto exchanges, the mechanisms for finding and cross-referencing these taxpayers are maturing.

In total, the tax authority received 237,369 tax statements with bitcoin registered investments. Previously, in October, the institution acknowledged the “vertiginous growth” of stablecoins in Brazil, which overtook cryptocurrencies like BTC in trading volumes.

To follow all the latest developments in crypto and the economy in Latin America, sign up for our Latam newsletter below.

What do you think about the Brazilian tax authority’s investigation to identify cryptocurrency taxpayers? Tell us in the comments section below.