Brazil to Consider Requiring FinTechs to Report Transaction Values
The head of Brazil’s tax revenue service, Robinson Barreirinhas, said Tuesday (March 11) that evidence of money laundering may require the country to once again consider requiring FinTechs to report transaction values.
Brazil suspended discussions of this proposal last year after a public backlash, Reuters reported Tuesday.
However, Barreirinhas told a Senate hearing Tuesday that there are indications that some lesser-known FinTechs are being used for money laundering due to the ease of opening accounts, according to the report.
Brazil’s tax revenue service issued a rule in September requiring FinTechs to start reporting transactions to tax authorities in January, including those made through the country’s instant payments system, Pix, but the government suspended the rule in mid-January amid a decline in popularity in opinion polls, the report said.
Opponents of the measure claimed that it was meant to tax workers, per the report.
Barreirinhas told the Senate hearing that the revenue service is concerned that smuggled cigarettes and e-cigarettes, cryptocurrencies and online betting are financing organized crime in Brazil, according to the report.
It was reported in January that Pix, the online instant payment system that was launched by Brazil’s central bank in late 2020, handles over $338 billion in transactions per month.
A soon-to-be-released recurring payments feature of Pix is expected to draw another $30 billion in eCommerce payments alone to the payment system.
Brazil has been a standout in virtually all metrics of being “plugged-in” to digital activities, including everything from working to communicating to shopping, according to the PYMNTS Intelligence report, “How the World Does Digital.”
The report found that within Brazil’s population of 215 million individuals, about 75% of consumers had a debit card, 77% used Pix and a nearly two-thirds engaged with financial services through mobile means.
Brazil is also reshaping the use of digital wallets, with consumers relying on them for bill payments and identity verification, unlike other countries, where they are mainly used for eCommerce, according to the PYMNTS Intelligence and Google Wallet collaboration, “Digital Wallets Beyond Financial Transactions: Brazil Edition.”
The report found that 47% of Brazilians used digital wallets for bill payments in the past year.
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