The Minister of Finance, Fernando Haddad, during the signing ceremony of the agreement between Sebrae and the Brazilian Agency for the Promotion of Exports and Investments (ApexBrasil) at the Palácio do Planalto. Photo: Marcelo Camargo/Agência Brasil
Provisional Measure No. 1,303, issued on June 11, 2025, bursts onto the Brazilian tax scene as a successor to the failed offensive that, a few weeks earlier, aimed to increase the IOF on currency exchange, cards, and, in a preliminary draft, even on stablecoin operations – although this lacked legal basis, as we argued in a previous article.
Faced with parliamentary resistance and negative market reaction, the Executive retreated, zeroed out part of the announced rates, and to compensate for the estimated revenue disappointment by the Government, resorted to a provisional measure to establish a unified Income Tax regime on financial applications and virtual assets, with a standardized rate of 17.5%.
Provisional Measure is an instrument with the force of law, provided for in Article 62 of the Federal Constitution, which can be unilaterally issued by the President of the Republic in cases of relevance and urgency. It produces immediate effects but depends on approval from the National Congress within a period of up to 120 days for definitive conversion into law.
It is therefore an exceptional legislative mechanism, whose recurring use in the tax field — especially on complex and structuring issues — has raised criticism for compromising the due legislative process and regulatory predictability.
The MP 1,303/2025 applies to virtual assets the tax logic historically applied to traditional financial applications, ignoring the operational, technological, and legal peculiarities that distinguish crypto assets — especially in the context of Brazilian exchanges that deal with multiple custody, staking, and liquidity models.
Every realization of profit, no matter how small, is now taxed quarterly at a flat rate of 17.5%, losing the benefit of the exemption threshold of R$ 35,000.00 monthly and the previous progressive model, which ranged from 15% to 22.5%.
Although the justification for the MP is the search for uniformity and predictability, in practice, what is imposed is a structural asymmetry, given that providers of virtual asset services based in Brazil now bear accessory obligations, expanded fiscal risks, and operational requirements that simply do not reach foreign competitors.
By requiring compliance with duties such as investigation, withholding, and collection of tax directly at the source, the MP imposes additional burdens on Brazilian PSAVs, while platforms based outside national jurisdiction remain beyond the reach of the new regime.
For exchanges based in Brazil, the consequence is twofold: in addition to assuming the operational burden of investigation and withholding tax on earnings distributed to users — a task that involves significant technical challenges, given the decentralized and automated nature of many of these operations — they also become, in practice, co-responsible for any inconsistencies in withholding, subjecting themselves to audits, fines, and reputational risk.
However, there is no analogous requirement imposed on competitors based abroad, who continue to attract national users without the same burdens.
This imbalance creates a hostile environment for those seeking to operate regularly in Brazil, favoring not only the relocation of operations to offshore structures but also causing users to seek autonomous contracts and decentralized environments, where the tax authority has no real capacity for monitoring.
Therefore, instead of stimulating the formalization of the sector, the regulation pushes operators into areas of lower tax visibility, making compliance a competitive disadvantage.
This is compounded by the incentive for capital flight, as Brazilian investors are not legally obligated to use national service providers to operate with virtual assets — they can, without legal restriction, resort to structures abroad that are more efficient from a fiscal and regulatory standpoint.
Even though the MP comes packaged in promises of legal certainty, the practical result is the opposite: it intensifies regulatory uncertainty, increases compliance costs, and deepens the inequality between companies that comply with Brazilian legislation and those that, outside the territory, continue to attract national users without the same burdens.
In the end, the risk is clear: to marginalize regular operations and reward cross-border informality, in a move that compromises both revenue collection and the integrity of the national ecosystem.