Since the launch of Bitcoin in 2009, investment behaviors and economic activities related to virtual currencies have quickly swept the world. So far, the total market value of global virtual currencies has exceeded US$2 trillion. From a regional point of view, China is an active country for virtual currency investment. Due to the limitations of traditional supervision methods, the risk of tax loss caused by virtual currency is worthy of in-depth study and discussion.
Comprehensively clarify industry tax-related data. As early as September 4, 2017, the Central Bank and other seven ministries and commissions jointly issued the “Announcement on Preventing the Risk of Token Issuance Financing”, which explicitly prohibits trading platforms from conducting “the exchange between legal tender and tokens and virtual currencies” in China. business”. After the promulgation of the ban, some domestic trading platforms chose to “go overseas” to provide domestic users with relevant trading services in the form of “overseas institutions”, and gradually formed an exchange industry led by Binance, Huobi, and Ouyi. With the popularity of the virtual currency market in recent years, the transaction volume of related platforms has increased rapidly. The total 24-hour transaction volume of spot and derivatives on the top platform even exceeds one trillion yuan, which is close to the single-day transaction volume of the A-share market. On September 24, 2021, the Central Bank and other ten ministries and commissions re-issued the “Notice on Further Preventing and Disposing of the Risks of Virtual Currency Trading Hype”, clearly stipulating that “the provision of services by overseas virtual currency exchanges to Chinese residents through the Internet is also an illegal financial activity. ” . According to the principle of “the law is not retroactive”, the services previously provided by overseas exchanges to residents of our country can be regarded as “the law is not expressly prohibited”, but they must pay value-added income in accordance with the tax law of our country on their income from the territory of our country. Tax, corporate income tax, stamp duty and other related taxes. Based on the previous trading volume and income of various virtual currency exchanges, the overall taxation scale of the exchange industry is quite considerable, and the taxation of other related industries needs to be further clarified.
Establish an overall framework for taxation supervision. Although China currently imposes strict restrictions on illegal financial activities in the form of virtual currencies, from the current situation, it is difficult for Bitcoin and other virtual currencies to disappear in a short period of time, and the future development direction cannot be determined. At the same time, within the current legal framework, China does not prohibit individuals from holding virtual currencies such as Bitcoin, and the transaction of virtual currencies is defined as an “invalid civil act”, but it is not explicitly prohibited by law. From a tax perspective, for domestic and foreign businesses and residents participating in virtual currency transactions, China should strengthen departmental collaboration and international multilateral regulatory cooperation, focusing on preventing illegal cross-border outflows of funds and the use of virtual currencies to avoid taxation at home and abroad. The account is included in the tax-related information exchange of financial accounts. At the same time, China should improve the relevant property declaration and registration mechanism, and carry out real-name registration and dynamic tracking of users who hold a large amount of virtual currency. In judicial fields such as fines and confiscations, reorganization, mergers and acquisitions, bankruptcy liquidation, etc., it is necessary to clarify the handling of virtual currencies to avoid the loss of national taxes. In addition, the tax department should actively cooperate with the central bank, financial supervision, market supervision, public security and justice departments to severely crack down on the use of virtual currency in the underground economy, smuggling, money laundering, tax evasion and other illegal activities.
Promote the upgrading of tax collection and management technology. Since the current virtual currency generally uses blockchain technology such as encryption algorithms and distributed accounts, it is difficult to track and monitor related economic activities on the chain through traditional technology, which puts forward higher requirements for the upgrade of tax collection and management technology. The blockchain technology itself has the characteristics of distribution, encryption, traceability, and non-tampering. These features are highly compatible with the requirements of tax collection and management, because the tax collection and management data itself has a wide range of sources. The requirements for protecting privacy are relatively high. Taking the opportunity of strengthening the tax collection and management of virtual currencies, it is of far-reaching significance to comprehensively explore the application of blockchain technology in tax collection and management. It is foreseeable that the research and application of encryption algorithms, distributed ledgers, smart contracts and other technologies will become important development directions in China’s Golden Tax Phase IV project and smart tax construction.
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