The first quarter (Q1) of 2019 introduced several key legal updates concerning cryptocurrency taxation. Q1 has seen various countries such as Italy, United States (U.S), Japan, Denmark, Poland, Romania, Venezuela, Indonesia, South Africa, India, Chile and others, define tax treatment for cryptocurrencies including Bitcoin (BTC), the top virtual asset by market cap (MC), Ethereum (ETH) and Ripple (XRP).
Some countries have also developed measures to guarantee the transparency of digital asset taxation. For instance, Italy, fiscal authorities are planning to use the blockchain technology to fight tax evasion – since the technology has the potential to create a system that enables taxpayers and collectors possess equal assurance in the frankness of the info/data collected. Here are the top 10 key updates in the crypto taxation globally that happened in Q1 of 2019.
The US, Denmark, and Japan being among the more developed cryptocurrency adopters are tirelessly working on compacting all possible taxation voids and introducing effective processes for guaranteeing compliance – for instance, by having access to user’s data and computerizing tax filing. In the US, traders will not be required to file taxes especially if cryptoassets are resulting from a fork or an airdrop, or used for shopping or when they are changed to fiat money. In Denmark, all cryptoasset exchanges are now demanded to reveal user data like names, CPR, addresses, and trading volume, to enable tax authorities to ascertain the total tax and act accordingly. In Japan, the financial services agency (FSA) wants to crackdown all unregistered cryptoasset investment undertakings – remember, the country lost over $74 million of fines and unsettled taxes, so it is trying to close all latent loopholes.
Poland and Romania are looking forward to advancing their investment attractiveness by providing low rates for digital currency traders (revenues over $22,000 are taxed 19%, and profits amassed from trading bitcoin will be subjected to 10% tax, respectively). In Poland, crypto traders will reveal and declare earnings generated from the sale of digital currencies. In Romania, traders will not declare taxes if they don’t exceed $50 gains, or if the total yearly earnings are not more than $150.
According to the research by CryptoHound, Venezuela, Indonesia, and South Africa have officially recognized the status and tax treatment of virtual assets. In Venezuela, crypto and foreign fiat currency dealers, are demanded to report and account it on their income taxes, as per the new regulations. In Indonesia, any trade involving cryptos are to be taxed like any other precious metals and Gold, the tax rate of 30% will be charged on income from cryptocurrency trade above $35,200 and no tax to all annual trades below $3,800. In South Africa, the newly enacted the Taxation Laws Amendment Act ring-fences losses from trading digital currencies.
India and Chile, while being secretive about their future plans, were spotted preparing new regulations with regard to cryptocurrency taxation. In India, crypto will be taxed as capital gains, ordinary business income or as commodities – and will be taxed by 18%. In Chile, digital assets are regarded as intangible assets – that is why they are exempt from the value-added tax (VAT). However, the traders will declare their cryptocurrency income just like other private income and/or third-party income from firms which reveal and state their effective income.