The Ministry of Finance of the Republic of Lithuania has announced on Wednesday, June 6, brand-new guidelines regulating the country’s crypto market. They consist of four main parts, namely regulation, taxation, accounting, and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT).
“We are one of the first ones in Europe who prepared comprehensive guidelines on the legal framework for ICO projects covering regulatory as well as taxation and accounting,” Vilius Šapoka, Lithuanian Minister of Finance, clarified.
A document on initial coin offering (ICO) guidelines, published by Lithuania’s Ministry of Finance last week, outlines the detailed information on how an ICO and a digital currency may act within the country. The financial institution, however, points out that these recommendations cannot be considered as law.
According to the part of the document related to regulation of the financial technology, the Ministry of Finance proposes to divide virtual coins into groups depending on whether or not they provide investors of an ICO with governance rights or profits. It is further suggested that current civil codes should be applied to any fintech venture involving crypto coins, with a coin acting as a payment tool or a method for accessing some goods. Besides, if the cryptocurrency gives any profits or governance rights, the financial regulations would be imposed on it.
The guidelines also include the taxation procedures for corporate and retail investors, with the last one paying standard 15% income tax rate. Under zero taxation will fall founders of ICOs whose trade coins either not active, or held for interest payments to investors. Miners will have to pay VAT, while crypto exchange for fiat or crypto trading for other currencies are not subject to VAT within the country’s financial market.
As for the accounting section, it outlines the matters such as when tokens should be recorded as costs in profits and loss statements, in off-balance accounts, or accounted at fair value. Speaking of AML/CFT, the authorities are developing new amendments to the 5th AML Directive. It is expected that the appropriate ministries will publish the first round of amendments in the near future.