The Federal Council, the lower house of Brazil’s parliament, has approved a bill stating that investment income received by resident individuals outside the country, including from investing in cryptocurrency assets, will be taxed at a rate of 15% to 22.5% of the profit.

Taxation at a rate of 15% starts on income between 6,000 and 50,000 reais (about $1,200 and $10,000 respectively), and 22.5% for income exceeding 50,000 reais.

The tax base is calculated taking into account fluctuations in the exchange rate of foreign currency or fluctuations in the exchange rate of a crypto asset in relation to the national currency, profitability from deposits in digital wallets, including interest on deposits of exchange accounts, transaction premiums and commissions.

The country’s authorities believe that Brazilian crypto investors, who according to various estimates make up about 7% of the population (more than 16 million people), will come to the attention of the tax authorities and will be forced to legalize shadow income.

Earlier, Brazil’s Securities and Exchange Commission (CVM) said that the country’s central bank’s secure digital currency (DREX) would help eliminate criminal cryptocurrency projects from the local market.