“Forbes” published an article on NFT taxation: the official tax collection in the future is still unknown

The issue of levying taxes on Bitcoin is already a matter for the market veterans to talk freely. The mainstream countries in the world have been inconclusive on the issue of charging standards. This year is the first year of the NFT. With the rapid development of the NFT, the NFT industry may not be far away from officially collecting taxes.

1. “Forbes” published an article on NFT taxation issues

On October 30th, “Forbes” published an article on October 28 on the issue of NFT taxation. It mentioned: Although the US Internal Revenue Service (IRS) has not issued any specific tax guidance for NFTs, most art-based NFTs (such as CryptoPunks ) may be classified as under IRS§408(m)(2)(A) Collection. In addition, the article mentioned that users holding an asset for less than 12 months and then selling it will generate short-term capital gains. For the highest taxation level, the highest tax rate for short-term income is 37%, and if the annual income exceeds a certain threshold, a net investment income tax of 3.8% is also required. Users who hold an asset for more than 12 months will generate long-term capital gains if they sell it. The long-term capital gains tax for cryptocurrencies is up to 20%. Similarly, those whose annual income exceeds a certain threshold are subject to a net investment income tax of 3.8%. The maximum tax rate for long-term NFT income of high-income earners is 28%.

Not only the NFT, but also the taxable issue of virtual currencies has a long history. With the expansion of the market value of virtual currencies, this issue has attracted widespread attention from countries all over the world. Many countries have also established special taxation regulatory policies. For example, Germany is the first country to tax virtual assets, and the United States is a country with relatively complete taxation.

Taking the United States as an example, the Internal Revenue Service (hereinafter referred to as “IRS”) regards virtual currencies such as Bitcoin as property and stipulates that the use of virtual currencies to pay is applicable to the general taxation principles of other goods transactions. In 2018, the IRS reminded taxpayers again that cryptocurrency transactions should be taxable like other forms of property. Failure to file tax returns may not only be liable for fines and interest, but may even be subject to criminal prosecution. Anyone convicted of tax evasion can face up to five years in prison and a fine of $250,000.

2. Necessity of NFT taxation

2-1. NFT companies hope to incentivize creators by collecting taxes

The rapid rise of NFT in the first half of this year successfully took over the baton of last year’s DeFi wave. In the context of the NFT market that has broken various records this year, this year’s phenomenal outbreaks have been achieved. News of the sky-high prices of NFT collections are frequently reported, top institutions and even traditional Industry giants have deployed and even participated in the event , and the data on the OpenSea platform , which is an important infrastructure of the NFT market , also portrays this shocking growth well.

With the new wave pushing the concept of NFT out of the circle, and attracting more and more investors to really participate in it, how to choose the most suitable one among the many NFT market platform applications is undoubtedly a must for many newcomers in the NFT market. A problem faced. With the continuous development of the NFT market, some platforms have begun to seek to optimize the royalty system to bring a steady stream of income to NFT creators, and at the same time provide income for all collectors handled in subsequent resales, so as to continue to inspire NFT The liquidity and drive the market to achieve a balance of supply and demand.

2-2. The NFT market expects tax authorities to collect taxes

The NFT market is booming, but with the frequent launch of sky-high-priced artworks, many people are jealous of the market began to appear a lot of chaos. The emergence of these “false empty” projects has seriously affected the normal development of the NFT market.

NFT is currently concentrated in the fields of intellectual property, artwork and other fields, and its popularity is high. Many celebrities and tourists have created their own NFT assets. Because NFT does not have clear legal constraints and regulatory provisions, NFT transactions have the dilemma that the rights and obligations of both parties cannot be clear and guaranteed, and the use of new technologies and new applications to engage in illegal and criminal activities and other risks.

If various US regulatory agencies start to collect taxes on the NFT industry, it will further regulate market chaos and help the long-term development of the market. As the NFT market becomes larger and larger, it provides a solid legal foundation for the advent of its era.

"Forbes" published an article on NFT taxation: the official tax collection in the future is still unknown

3. NFT taxation conforms to the development trend of the times

The future of NFT lies in valuing the consensus of hundreds of millions of communities around the world, and it is advancing at an irresistible pace. Art, games, copyright, etc. are just a small picture of this big future. Soon, influential people, IP parties, organizations will begin to forge and distribute their own NFTs.

A good vision requires a corresponding system as the cornerstone, and taxation is the first step. NFT empowers the real industry and must be supported and encouraged by policies. In the future, with the development of the NFT market, all countries will successively introduce relevant policies to enable the healthy development and growth of the NFT market ecology.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/forbes-published-an-article-on-nft-taxation-the-official-tax-collection-in-the-future-is-still-unknown/
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