Recently, a report from the local Russian media The Bell showed that the Russian government’s crypto tax revenue is as high as 1 trillion rubles (about 13 billion US dollars). In addition to Russia, countries including the United States, South Korea, India, Thailand, the United Kingdom, South Africa, and Switzerland have or are planning to levy taxes on crypto-asset-related transactions. With the gradual increase in the market value of the crypto market, taxation has become a topic of focus for tax authorities and legislatures in various countries. Which countries have started or plan to introduce taxation policies related to crypto assets? What does taxation mean for crypto assets and how will it affect the crypto market?
On February 9, according to the document of the cryptocurrency regulation proposal released by the Russian government, Russia may allow the trading of encrypted assets, but users can only buy through locally registered and licensed companies, so that government agencies can obtain these identity transaction information. . However, all crypto-asset-related transactions over 600,000 rubles (approximately RMB 51,000) must be reported to the Federal Tax Service, otherwise it should be considered a felony.
As the third-largest country for bitcoin mining, this approach puts Russia on the same level as foreign currencies, regulating it in a similar fashion. The Russian media Kommersant said the new laws and directives could come into force in the second half of 2022 or early 2023. In Russia, which has a population of about 144 million, there are more than 12 million cryptocurrency accounts and crypto assets worth about 2 trillion rubles ($26.7 billion), according to government documents. The report estimates that the Russian government could collect as much as 1 trillion rubles (about $13 billion) in crypto taxes annually, and even the most direct tax collection could generate between 146 billion rubles and 1 trillion rubles in crypto tax revenue.
India is one of the fastest growing markets for crypto transactions in the world, and it is also an early country in terms of crypto taxation. On February 1, 2022, local time, the budget submitted by Nirmala Sitharaman, Minister of Finance of India, stated that any income from the transfer of virtual digital assets will be taxed at a rate of 30%, including encrypted assets and NFTs and people from digital assets. Other ways of earning, such as mining, liquidity income, etc. Meanwhile, on February 2, the Indian government stated that it does not consider crypto-asset trading as illegal.
Finance Minister Sitharaman stated that the scale and frequency of crypto transactions make it necessary for the government to provide a specific tax regime for the collection of cryptocurrencies. Apart from high tax rates, India does not allow any deductions or discounts when calculating crypto-related income. In the country, 30% is the top tax rate applicable to individuals earning more than Rs 1.5 million per annum compared to the traditional tax rate. So crypto taxation will be a substantial income for the country. According to a Chainalysis report last October, the Indian crypto asset market grew by 641% between July 2020 and June 2021. The Indian cryptocurrency market is expected to reach $241 million by 2030.
In addition to Russia and India, the latest crypto taxation plans, South Korea has also been one of the most active countries in the crypto market. South Korea’s plan to tax the crypto space has been in the works for a long time. Originally, the South Korean government had officially confirmed the taxation plan last year and planned to start taxation in January 2022. However, in December 2021, South Korean legislators have decided to postpone the taxation of cryptocurrency transactions to January 1, 2023. According to the original taxation plan, the annual income of cryptocurrencies obtained by Korean resident taxpayers is exempt from tax for the part below 2.5 million won, and the capital gains tax is levied at a rate of 20% for the part above 2.5 million won. The reporting period is May 1 of the following year. As of May 31st, the declarable income includes domestic and overseas income. Failure to report will be punished with a fine of 20% of the underreported amount; citizens are obliged to pay taxes on the cryptocurrency they gift or inherit from family members or acquaintances according to relevant tax laws. .
Compared with the tax burden borne by South Korean investors on stock gains, there are two major differences in the requirements of South Korea’s crypto taxation plan: stock investors only pay tax on gains over 50 million won, while crypto asset investors have gains of 2.5 million won. Tax is due. Additionally, losses for stock investors can be carried forward for 5 years, while losses for crypto investors cannot be carried forward.
As one of the countries with the greatest regulatory influence, cryptoassets have also been an area of continued focus for the Internal Revenue Service (IRS). As early as 2014, the U.S. Internal Revenue Service identified Bitcoin as property, similar to other valuable commodities, but not currency, and put forward the requirement that “cryptocurrency transactions need to report information as a tax return reference”, but did not specify the specifics. rule. Until 2016, the IRS announced the identification of 5 compliance activities, which included virtual asset tax issues. It also obtained court approval to obtain the identity and transaction history information of US customers of Coinbase, a major US cryptocurrency exchange, in order to tax crypto. In 2019, the IRS began developing crypto tax guidance. According to previous IRS regulations, crypto asset holders must record their trading activities and gains/losses, complete and submit Form 8949 to register with the tax department.
In early February 2022, several U.S. lawmakers introduced the Virtual Currency Tax Fairness Act, which would create a workable structure for the taxation of crypto-asset transactions. If passed, the bill would prevent the IRS from taxing crypto trading gains of $200 or less. In addition, the bill would expand the use of cryptocurrencies for payments and further strengthen “the legality of virtual currencies in the digital economy.”
Current U.S. legislation currently mandates that any cryptocurrency gains must be reported as taxable income, regardless of the size or purpose of the transaction. The lawmakers argued that the current law “not only makes the everyday use of virtual currencies nearly impossible, but also inhibits the growth of the digital economy”. Under current U.S. tax law, capital gains events are taxed at approximately 20%. The deadline for residents to file tax returns on cryptocurrency and fiat income is April 18.
In November 2021, HM Revenue and Customs (HMRC) published a tax guide to help cryptocurrency traders and investors understand their tax obligations in the UK. HMRC said that cryptocurrencies are not considered money and are more like traditional investments such as stocks, so cryptocurrency profits are subject to capital gains tax. The guideline proposes that profits from trading cryptocurrencies should be reported annually on an individual’s self-assessment tax return or a company’s corporate tax return. Crypto profits are treated as capital gains or losses, but it must be clear that trading fees on exchanges cannot be offset against profits, and traders are urged to keep records. Traders get £12,300 a year of personal capital gains tax exemption – which is frozen until 2025. The annual allowance income is taxed at 10% for basic taxpayers and 20% for high taxpayers. However, HMRC guidance is not law and has no legal force.
Venezuela & Argentina
In addition to the above countries, some South American countries, including Venezuela and Argentina, have also started taxing crypto transactions. On Feb. 7, local media in Venezuela reported that the country’s government had approved a new tax bill aimed at collecting up to 20 percent in taxes from cryptocurrency transactions. Argentina, on the other hand, announced in November 2021 a 0.6 percent tax on companies offering cryptocurrency trading services.
Additionally, in January, Thailand’s Ministry of Finance originally announced a crypto tax policy, stating that profits from cryptocurrency transactions are subject to a 15 percent capital gains tax. This was followed by an announcement in February that the tax on private cryptocurrency investors had been lifted. Of course, in addition to these countries that have introduced crypto tax policies, there are also many countries that are more “tolerant” in terms of crypto taxation. For example, Malaysia, Singapore, Portugal, Belarus, etc. have adopted a certain degree of tax-free policy for encrypted transactions.
Regarding the impact of state taxation on crypto-asset transactions, many financial experts believe that taxing crypto-asset transactions may reduce market liquidity and inhibit crypto-asset-related transactions, especially in countries with higher tax rates, which may deter foreign Investment funds flow into the country. But there are also investors who believe that crypto taxation means that the country will incorporate it into legislative supervision, which will push the crypto asset class on the track of legalization. In this regard, the Indian Minister of Finance stated that the current taxation policy does not treat crypto-asset transactions as illegal activities, and will not legalize or ban crypto-assets at this stage, and the legality of cryptocurrencies is still an open issue.
From an objective point of view, the crypto taxation policy may reduce the actual benefits of crypto investors, but it also reflects the widespread changes in the regulatory attitudes of various countries towards crypto assets. If the legislatures of some countries express their recognition of the legality of crypto transactions, it may have a certain degree of impact on the prices of crypto assets.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/russias-crypto-taxes-up-to-13-billion-which-countries-are-taxing-crypto/
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