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Compiled by | Carol, Jin Zhaoyu
Produced by | Blockchain Camp (ID: blockchain_camp) Header image | Paid download from Visual China Recently, the National Tax Service of South Korea has seized 2,416 tax evaders who hid their assets in Bitcoin, and has now recovered nearly 36.6 billion won (about 297 million yuan) in taxes in the form of cash or debt. According to data from the National Tax Service, the number of crypto investors in South Korea has increased by more than 300% in the past 12 months, while the volume of digital currency transactions has increased eightfold. The investigation into individuals using cryptocurrencies to evade taxes is part of its "anti-social tax avoidance" crackdown. At the same time, South Korea will impose taxes on virtual asset income from 2022, and plans to impose a 20% capital gains tax on cryptocurrency trading profits exceeding $2,300. Exchanges must also regularly report virtual asset holdings to the National Tax Service. This means that starting next year, domestic residents or domestic companies with a total balance of more than 500 million won in overseas financial accounts (including virtual assets in overseas exchanges) on the last day of each year must report to the competent tax authorities in June of the following year. Violations of the obligation to report overseas financial accounts will be subject to a fine of up to 20% of the unreported amount, and if the unreported amount exceeds 5 billion won, they will be subject to criminal prosecution and list disclosure review. In South Korea, the lack of relevant laws and regulations has led to tax evasion by some unscrupulous elements. However, in some countries, even with legal constraints, there are still people who frantically test the edge of breaking the law. In the United States, cryptocurrency is considered an asset rather than a currency, and trading cryptocurrency is a taxable event that is subject to capital gains tax. This means that every time you buy or sell cryptocurrency, you must calculate and report your gain or loss. Those who receive cryptocurrency wages must also report it as income. The U.S. Internal Revenue Service (IRS) requires U.S. taxpayers to answer the following question when filing their tax returns: "At any time in 2020, did you receive, sell, send, exchange, or otherwise acquire a financial interest in any virtual currency?" The IRS asked taxpayers this question last year, and taxpayers must answer it clearly. Whether they are feigning ignorance or genuinely unaware, many U.S. taxpayers fail to report their cryptocurrency holdings.
A look at the cryptocurrency tax policies of various countries Because cryptocurrencies such as Bitcoin can be purchased anonymously, they often become a powerful tool for money laundering and tax evasion. In Hollywood movies, cryptocurrencies are also the first choice for villains to conduct illegal transactions in the dark of night. However, blockchain is not a lawless place. As a booming investment project, cryptocurrency cannot become a hotbed of crime in vain. As cryptocurrency develops more and more rapidly, it is being used as a payment tool and investment opportunity by people all over the world. In order to combat illegal activities such as money laundering and tax evasion, countries have issued different laws and regulations based on the development status of their own cryptocurrency markets. The IRS said that taxpayers who fail to accurately report virtual currency trading income may face the risk of criminal charges. If convicted of tax evasion, they will be sentenced to up to five years in prison and a fine of up to $250,000. In December 2016, the IRS asked trading platforms including Coinbase to provide information on approximately 500,000 users. However, the trading platforms have always refused to provide it. In the end, the court ruled that Coinbase provided information on 13,000 users. Cryptocurrency taxation in the UK is very similar to that in the US, where the taxation of cryptocurrencies and crypto assets depends on their nature and use. According to previously released guidelines, HM Revenue and Customs (HMRC) considers an individual's crypto assets as personal investments. Therefore, holders are required to pay capital gains tax when they convert cryptocurrencies into fiat currencies or other tokens. Japan considers Bitcoin to be primarily an asset and also a form of payment. On July 1, 2017, the Payment Services Act stipulated that the sale of Bitcoin is exempt from consumption tax. Bitcoin and other virtual currencies in Japan are regarded as assetized values, which can be transferred digitally and used for payment. In February 2018, the National Tax Agency of Japan announced that investors who have gained income from investing in cryptocurrencies must report taxes to the National Tax Agency between February 16 and March 15 of that year. The tax rate is progressive, ranging from 15% to 55%. Bitcoin has been officially recognized as a private currency in Germany since 2013. Bitcoin owners are subject to capital gains tax, which currently stands at 25%. However, this is only taxed if the profit is made within one year of the purchase of the Bitcoins. Cryptocurrency owners are not subject to capital gains tax if they hold the cryptocurrency for more than one year. In March 2018, Thailand’s finance minister announced the final framework for taxing cryptocurrencies after a cabinet meeting: transactions will be subject to a 7% value-added tax (VAT) and a 15% capital gains tax. In addition to the above countries that impose taxes on cryptocurrency transactions, cryptocurrency transactions in some countries are tax-free. In Australia, cryptocurrency transactions for personal use are tax-free in the following cases: when Bitcoin is used as payment for goods and services for personal use; and when the transaction amount does not exceed AUD 10,000. Activities such as mining or exchanges are treated as stock transactions and are therefore taxable. Portugal has issued a statement making the purchase/sale/trading of cryptocurrencies completely tax-free. It is the only European country to have taken such a stance so far. The statement follows Portugal’s closed taxation system (only explicitly listed items can be taxed, such as stocks, bonds, etc.).
What can constrain you? Cryptocurrency 2020 was a difficult year for the people of the world, but at the end of 2020, other cryptocurrencies, including Bitcoin, ushered in their own "spring". For several months, the price of Bitcoin has been up and down, from $20,000 per coin at the end of 2020 to the current peak of $60,000 per coin. Bitcoin cannot but be said to be one of the hottest investment areas nowadays, which also reflects investors' confidence in the cryptocurrency market. The rapid development of the cryptocurrency market corresponds to the absence of relevant laws and regulations. Investing in cryptocurrencies has become a carnival all over the world. The rise and fall of Bitcoin may create countless multi-millionaires and cause countless people to "explode" and lose all their money. Under such market conditions, the cryptocurrency market urgently needs more constraints and regulations, but the trading of cryptocurrencies lacks global consistency and unified supervision. A major obstacle to the standardization of cryptocurrency transaction taxation is the conflict between the anonymity of cryptocurrency and the real-name tax system. Governments are working hard to clearly define cryptocurrency and its transaction nature, but there is still a lack of a perfect solution. Funds continue to pour in, the market continues to expand, and the legal system is difficult to keep up. The longer it is delayed, the more difficult it may be to solve the problem. However, the continuous introduction of policies and new regulations also allows us to see the efforts of governments around the world, and the standardization of cryptocurrency is just around the corner. |
