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Why the tide of taxation on encrypted digital currency is in 2020
First, let’s summarize the data of the encrypted digital currency market from 2019 to 2020. According to data from DD Think Tank, as of 24:00 Beijing time on December 31, 2019, the total market value of the global encrypted digital currency market was 192.769 billion US dollars. A total increase of 53.35% throughout the year.
As of January 5, 2020, there are 4,993 digital currencies in the global encrypted digital currency market, with a total market value of 199.768 billion US dollars. Compared with the total market value of US$125.708 billion at the beginning of 2019, the entire encrypted digital currency market has increased by US$74.06 billion, a year-on-year increase of 58.91%.
It can be seen from this that the encrypted digital currency market is gradually expanding globally, especially in 2019, and the digital trend has become unstoppable.
Although Libra is a very hot overseas project in 2019, the progress of China's blockchain technology and the research and development of the central bank's digital currency also affect the hearts of governments and industry insiders from another angle.
The research and development of Libra has brought a huge impact. Under the leadership of China, governments around the world have successively expressed their views on central bank digital currencies. At the same time, they have also announced the progress of central bank digital currency research and development in various countries.
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National encrypted digital currency tax policies are gradually improving
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US: IRS Waives Taxpayers From Cryptocurrency Game Transactions
In 2014, the U.S. issued “Notice 2014-21,” which warned cryptocurrency holders that they would be penalized if they did not pay taxes for crypto transactions.
In October 2019, the US Internal Revenue Service (IRS) issued tax guidance on cryptocurrencies and made it clear that, for federal income tax purposes, tokens for airdrops/forks are only recognized when investors are able to dispose of their holdings. currency.
Once a taxpayer acquires the ability to transfer, sell or exchange cryptocurrencies, they will be deemed to accept cryptocurrencies. When transacting through a cryptocurrency exchange, the value of the taxable transaction is the amount recorded by the platform in U.S. dollars. Additionally, the taxpayer's purchase and sale prices will determine whether a gain or loss has occurred and how long it lasted.
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UK: Take digital asset tax avoidance seriously, tax declaration becomes more important in 2020
The first guidelines for cryptocurrencies came out in 2018 following the submission of a special report by the UK Digital Assets Task Force. The guidance clarifies some important details of how HMRC views cryptocurrencies. Many see the guidelines as a prelude to stricter taxation of encrypted digital assets.
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Thailand: Thailand will tax cryptocurrencies
On November 25, 2019, Patchara Anuntasilpa, director of the Thai Taxation Administration, said in an interview with the Bangkok Post that the Thai taxation department will change the current tax refund practice by introducing a blockchain-based tax refund system, and hopes that in 2020 implement the system.
According to foreign media reports last month: Thailand’s Finance Minister Apisak Tantivorawong announced the Thai government’s tax framework for encrypted digital currencies. This time, the Thai government’s taxation scope for encrypted digital currencies in Thailand is very broad, covering all encrypted digital currencies. ROI and retail transactions.
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South Korea: Expected to Tax Cryptocurrency Transactions in 2020
According to the Korea Times, there is no direct taxation framework for capital gains from the sale of encrypted digital assets in 2019. South Korea's Ministry of Economy and Finance is working on the measure, which will become a tax bill starting in 2020.
"Relevant discussions have already begun. The revised bill will be drafted in the first half of 2020," an official from South Korea's Ministry of Economy said.
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China: Court Describes Bitcoin as a Virtual Asset, Chinese Tax Authorities May Introduce Crypto Tax Policy
In July 2019, a Chinese court formally described Bitcoin as virtual property, thereby gaining legal recognition.
The ruling is part of a dispute between a now-defunct exchange and a user who lost funds. Currently, China has no specific regulations on crypto taxation, but the court’s focus on cryptocurrencies as an asset may prompt Chinese tax authorities to introduce crypto tax policies. The encrypted digital currency market continues to be hot in 2020, and China may introduce an encrypted digital currency tax policy this year.
In addition to the taxation policies of encrypted digital currencies in the above countries, there are plans or actions in 2020. Many other countries have already introduced relevant taxation policies for encrypted digital currencies.
Many countries, including Bermuda, Iran, France, New Zealand, and Japan, have enacted tax policies for cryptocurrencies. Of course, some countries have stated that they will not tax the encrypted digital currency market for the time being.
The "Pros" and "Disadvantages" of Encrypted Digital Currency Taxation
Many people have questioned the taxation of cryptocurrencies, arguing that the anonymity of cryptocurrencies means that very few people know the sender or receiver of a transaction.
But government tax and other regulators are leaning toward exchanges introducing KYC (Know Your Customer) guidelines before requiring access to those records. This will lead to the exposure of everyone's identity, without the anonymity originally proposed by the blockchain.
This is indeed a disadvantage, but in fact, absolute freedom is a hidden danger. The current world civilization has been acquired through thousands of years of practice, and the supervision and laws of various countries are the key to maintaining social civilization and security. The most important. In fact, decentralization does not mean absolute decentralization.
At present, the relevant policies of various countries are actually not perfect, and the global default rules may eventually be reached, but this requires the accumulation of businesses based on cryptocurrencies, and then use a certain distribution method to distribute these taxes by jurisdiction.
Think about it in another way. In fact, the tax policies of various countries on encrypted digital currency just represent that encrypted digital currency is gradually being recognized by the world. Great protection.
The rigor of the encryption market is not comparable to that of the legal currency market, and it has the characteristics of anonymization. Digital currency is often used in smuggling, drug trafficking, money laundering, underground transactions and other fields, and has always been on the edge of the law.
The global acceptance of encrypted digital currency transactions is also increasing, and the transaction volume and transaction amount are gradually increasing. Effective supervision of it is a problem that governments at all levels must face and solve. As an important means of supervision, a reasonable tax policy will naturally be put on the agenda.
In 2020, the encrypted digital currency market should receive greater attention and popularity, and the world is also very likely to start a wave of tax policies for encrypted digital currency.
