Rio De Janeiro – Tax Discounts When You Pay In Bitcoin• January 14, 2022 10:39 pm • Comments
The mayor of Rio De Janeiro, Eduardo Paes, recently announced that the city will allocate 1 percent of it’s treasury to Bitcoin in an effort to have the city become the tech capital of South America.
As part of this movement to pursue crypto adoption, the city has also announced that they will provide a 10% discount on taxes paid in Bitcoin.
This announcement makes Rio De Janeiro the first city in Brazil to buy bitcoin as a store of value and will help establish a framework that will encourage further crypto development in the future.
“Rio de Janeiro has everything it takes to become the tech capital of South America. Events like the Rio Innovation Week come to strengthen the city’s image as the perfect place to work, live and innovate,” Paes said.
“Miami and Rio are global cities, attracting people, businesses, and organisations. This international dialogue is essential.”
However, it still needs to be seen how many coins the city will be able to buy in the market when it acts.
Rio De Janeiro is not the first city, however, to pursue this type of idea.
Previously, the city of Miami had launched it’s own native crypto called “MiamiCoin” where the profits of this coin was distributed among the city’s residents.
According to a recent report from October, currently the city has about $50 billion worth of crypto assets and the country’s citizens are continuing to embrace other cryptos like bitcoin and ethereum.
JUST IN – Rio De Janeiro mayor announces 10% discount on taxes paid in #Bitcoin 🇧🇷 pic.twitter.com/wsfdqcdEFn
— Bitcoin Magazine (@BitcoinMagazine) January 14, 2022
The 10% discount that was mentioned will certainly encourage faster adoption within the city as the residents already have many taxes that they have to pay besides income tax.
That being said, the transition will certainly not be easy as there are many things to consider, especially as legal and tax regulation is typically slow compared to technological progress.
As a result, as increased adoption occurs, it leads to the question of how it will be treated from both a legal and a financial perspective.
The city of Rio’s secretary Chicão Bulhões said that Rio will be a pioneer in Treasury investment in crypto assets.
“The idea is to take companies from this universe beyond the South Zone,” he noted.
Even with the idea of Crypto Rio and the rapid investments and interests surrounding it, one has to note that legal uncertainties still remain.
It is important to note that, even if the crypto asset in question is being developed, issued and governed by a governmental entity, it is treated as same as Bitcoin from a legal and tax perspective.
Additionally, as payouts from the city’s reserves generated on these projects begin to take place, it will certainly have implications for both institutions involved and individuals.
So far, public reaction to the mayor’s announcement has been fairly positive. Citizens have often complained that they have to pay a plethora of different taxes including IPVA, IPTU, and VAT tax.
Any payment method that lessens the burden on the city’s residents has been well-received and the city’s move to allocate a portion to crypto seems to be a smart hedge against any possible inflation.
Rio De Janeiro is one of the first cities to allocate part of its funds to crypto and may be one of the first of many cities to come.
Governments of all sizes are starting to HODL #BTC https://t.co/UFPVunXFQu
— Yago (@EdanYago) January 14, 2022
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