Editor's Note: This article comes fromBabbitt Information (ID: bitcoin8btc), Author: Helen, published with permission.
Editor's Note: This article comes from
Babbitt Information (ID: bitcoin8btc)
, Author: Helen, published with permission.
Regulation has always been the sword of Damocles hanging over cryptocurrencies. People tend to pay attention to the hard regulation of ICOs and exchanges, but it is easy to ignore the "soft regulation" of taxation for cryptocurrency holders. This article will review the new global policy trends in 2019 from the perspective of "tax".
An obvious trend is that many national tax agencies have begun to tax cryptocurrencies. A typical representative is the J5 international task force composed of the tax authorities of the United States, Australia, the United Kingdom, the Netherlands and Canada.
The US Internal Revenue Service (IRS) established a virtual currency team and sent two rounds of letters to their established cryptocurrency holders to pay taxes; the Australian Taxation Office (ATO) dealt with 12 tax avoidance cases involving the misuse of crypto assets case, and allocates $1 billion to fight tax avoidance; HMRC pressures cryptocurrency exchanges to disclose customer names and transaction history; Canada Revenue Agency (CRA) invests in cryptocurrency in March After distributing a 14-page questionnaire, the government also began to crack down on tax-related non-compliance.
Correspondingly, there are some countries that are tax-free for cryptocurrencies, such as Germany, Singapore, Portugal, Malta, Malaysia, Belarus, and Switzerland.
In July of this year, Singapore’s Internal Revenue Service (IRAS) released a draft exempting goods and services tax (GST) and value-added tax (VAT) on payment-type cryptocurrency (DPT) transactions; It is unconditionally tax-free. An official ruling document published in August stated that exchanging cryptocurrencies for fiat currency is tax-free, adding that cryptocurrency users are not required to pay any income tax.
The other five countries have also announced tax exemption policies under certain conditions in previous years. Germany exempts value-added tax on Bitcoin transactions held for more than 1 year; Malta also exempts long-term holdings of cryptocurrencies from taxation; the Malaysian government does not levy capital gains tax; Belarus last year gave many tax exemptions to cryptocurrency activities; Switzerland is relatively complicated, Tax-free for individual investors, professional cryptocurrency traders need to pay business tax, and employers who pay wages in the form of cryptocurrency need to pay personal income tax.
Other interesting developments include the fact that some countries have lowered taxes this year after trying to tax cryptocurrencies. For example, the French Parliament passed the Pact Act in April, reducing the capital gains tax from 36.2% to 30%, while currency transactions will be tax-free.
Other countries, such as Kyrgyzstan, Iran and Slovenia, focus their taxation not on transactions but on mines. The Ministry of Economy of Kyrgyzstan is exploring two possible options for taxing cryptocurrency mining; the Iranian National Tax Agency (INTA) stated that miners can obtain tax exemption if they agree to repatriate overseas surplus; and penalize individuals who engage in cryptocurrency mining or trading activities without paying taxes.
On the whole, global cryptocurrency regulation presents four characteristics in terms of "tax":
From a definition point of view, most countries position cryptocurrencies as capital assets such as stocks, securities, gold, and real estate. If the income from selling virtual currencies exceeds the adjusted purchase cost (tax base), taxable income will be generated ; and the virtual currency-related draft amendments just passed in Japan in March changed the name of "virtual currency" to "encrypted assets", but the interest income generated by encrypted asset transactions is classified as miscellaneous income, and the income tax can reach up to 45%.
From the perspective of the amount, there are great differences between countries. The Bulgarian government imposes a relatively modest 10% tax on cryptocurrency trading profits. Sweden taxes up to 300% of profits, which means you pay $3 in tax on $1 earned. Even more exaggerated is Australia, where an investor stated that he owns $20,000 worth of cryptocurrencies but must pay $100,000 in taxes.
Due to the large number of countries involved, the following is divided according to continents, sorting out the tax policies of various countries on cryptocurrencies since 2019.
USA
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USA
Canada
The U.S. has launched a series of cheating operations against cryptocurrency tax issues this year. At the end of January, it was reported that the IRS established a virtual currency team and began to obtain records and resources to track non-compliant taxpayers and crack down on non-reporting of encrypted assets. On May 21, the IRS stated in a public response letter that it would give priority to issuing cryptocurrency tax guidance. It should be known that following the "Notice 2014-21", the IRS has not updated its guidance for five years.
Canada
The Canada Revenue Agency (CRA) has been operating a dedicated cryptocurrency unit since 2017. Earlier this year, the CRA conducted about 60 audits of companies or individuals involved in cryptocurrency trading and mining.
On March 7, the Canada Revenue Agency (CRA) issued a 14-page questionnaire to cryptocurrency investors in the country, covering the ways to purchase encrypted assets, whether the cryptocurrency has been stolen, and whether they have participated in ICO and cryptocurrency mining. Mining and many other aspects. On June 15, the CRA stated after an investigation that there are many types of cryptocurrencies and related businesses in Canada, and the risk of non-compliance is high. The CRA is cracking down on cryptocurrency tax-related noncompliance.
2. South America
Venezuela
Brazil
In May, Brazil’s Internal Revenue Service issued Regulation 1888, which applies to various cryptocurrency-related activities. Starting August 1, Brazilian citizens are obliged to report their cryptocurrency transactions to the country’s Internal Revenue Service if the monthly transaction amount exceeds 30,000 Brazilian reals ($7,800). Those who fail to report truthfully face fines ranging from 1.5% to 3% of the value of the unreported transaction.
In January, the Venezuelan government issued a decree requiring taxpayers conducting crypto businesses in the country to pay taxes in cryptocurrencies.
Starting in April this year, Chilean residents are required to pay taxes related to cryptocurrencies, and the government of the country has included encrypted assets in the tax list. Chilean residents must report income related to cryptocurrency transactions as “other personal income/third-party income,” according to documents from the Chilean Internal Revenue Service. Taxpayers are understood as all persons who own cryptocurrencies, including cryptocurrency traders and miners.
U.K.
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U.K.
Portugal
On August 6, foreign media sources stated that the UK Revenue and Customs Administration (HMRC) is putting pressure on cryptocurrency exchanges to disclose customer names and transaction history in order to recover unpaid taxes. It is reported that Coinbase, eToro and CEX have all received letters.
In September, HMRC, eToro and accounting industry body ICAEW jointly provided tax advice to crypto traders in a webinar. HMRC wants crypto traders to apply capital gains tax rules to their profits and losses in the same way investors buy and sell stocks.
A document published by Portuguese tax authorities in 2016 had stated that income from the sale of cryptocurrencies in Portugal would not be subject to income tax. On August 26, Portugal’s tax and customs authorities reconfirmed that no VAT is levied on cryptocurrency transactions or payments. The Tax Office provided clarification to a local cryptocurrency mining company and issued an official ruling document. Said that exchanging cryptocurrencies for fiat currency is tax-free, adding that cryptocurrency users are not required to pay any income tax.
France
On July 29, Slovenia’s financial administration said it was working to detect and punish individuals who engage in cryptocurrency mining or trading activities without paying taxes.
Sweden
France
On April 16, the French Minister of Finance stated that the French Parliament recently passed the Pact Act, creating a new legal framework for ICO and digital asset service providers. The new fiscal bill simplifies and reduces taxes applicable to retail investors selling crypto assets: annual returns replace monthly returns, capital gains tax is reduced from 36.2% to 30%, and crypto-to-crypto transactions will be tax-free, but purchased in a professional capacity - Resale of crypto assets is taxable.
The Swedish Tax Authority (STA) is taking cryptocurrency cases more and more seriously. In 2018 alone, the STA launched an investigation into the activities of as many as 400 Swedish cryptocurrency traders. Multiple bitcoin traders have received tax bills worth millions of kronor. There is also a trader who thinks that these tax requirements are "unreasonable" because he is charged 300% of the total profit.
The Bulgarian National Tax Agency (NRA) classifies cryptocurrencies as financial assets, and individuals are subject to a 10% tax on profits earned on financial assets. According to news on January 16, the Bulgarian government has begun investigating cryptocurrency exchanges and taxing investors' profits from cryptocurrency transactions.
Japan
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4. Asia
The draft amendments related to virtual currency drafted by the Japanese cabinet on March 15 were passed, changing the name of "virtual currency" to "encrypted assets", but it still belongs to "miscellaneous income".
Singapore
On July 19, the Japan Virtual Currency Exchange Industry Association (JVCEA) submitted a virtual currency "Tax System Amendment Petition" to the Financial Services Agency. Immediately after July 24, the Japan Virtual Currency Business Association (JCBA) also submitted a request for tax system revision in 2020. However, the latest “Requirements for Tax System Amendment” announced in August did not mention the content of virtual currency, which may mean that there is still no progress in the revision of the virtual currency tax system at this stage.
India
On July 5, the Inland Revenue Authority of Singapore (IRAS) released a draft to exempt goods and services tax (GST) and value-added tax (VAT) on payment-type cryptocurrency (DPT) transactions. The draft, if passed into law, would come into effect from January 1, 2020.
Iran
India
In August, the Indian bitcoin community group IndiaBits stated that the Indian income tax department issued a notice to some cryptocurrency traders and investors, requesting information on taxpayers’ sources of income, the name of the cryptocurrency traded, and details of the hardware wallet. The notice also warned that fines would be imposed on willful tax evaders.
Iran’s National Tax Agency (INTA) said on Sept. 12 that cryptocurrency miners in Iran can qualify for tax exemption if they agree to repatriate their overseas surplus. According to INTA, crypto mining is a taxable business and, like other industrial activities, should follow the requirements of the Central Bank of Iran.
Israel
On August 28, the Ministry of Economy of Kyrgyzstan submitted the “Draft Law on Revising the Tax Code” with the aim of introducing a tax on cryptocurrency mining. The Ministry of Economy of Kyrgyzstan is exploring two possible options for taxing cryptocurrency mining, the first being a tax on income and the second being a tax on expenses incurred during cryptocurrency mining.
In a judgment in May, Israel’s Central District Court accepted the position of the Israeli tax authorities that Bitcoin is an asset, not a currency, and that profits from the sale of Bitcoin are subject to capital gains tax.
Australia
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5. Oceania
Australia
The Australian Taxation Office (ATO), which will collect extensive records from its designated cryptocurrency service providers (DSPs), will launch a data matching program. The ATO estimates that between 500,000 and 1 million Australians are invested in crypto assets.
In April, the ATO began regulating cryptocurrencies held by Australian citizens. In June, the Australian Taxation Office (ATO) dealt with 12 tax avoidance cases involving the misuse of crypto assets. It is reported that the ATO has allocated $1 billion to combat tax avoidance, with a particular emphasis on cryptocurrency transactions. The ATO plans to first access data from Australia's designated crypto service providers, move to smaller providers later this year, and then expand to foreign digital service provider regions.
new Zealand
