Decentralization is a core idea behind Bitcoin and other blockchains. The power is shared across the network of users, instead of in centralized locations such as banks and governments. Some users think that crypto taxes and regulations are contradictory to the decentralized nature of blockchain. Still, finance experts think that regulation triggers crypto mass adoption and demonstrates the maturity of the market.
Cryptocurrency is still a young technology and there is not yet a uniform approach to regulating it. As a result, we focus primarily on the unfolding taxation frameworks in the European Union and the United States.
The news comes as more and more countries are exploring ways to tax income related to the expansion of the crypto asset market. Here are some going to implement crypto tax laws in 2022.
The country’s rules on cryptocurrency tax have been already adopted and will take effect in 2022.
Under the new rules, the government will tax personal income from digital assets at 20% if the total income exceeds 2.5 million won. The Deputy Prime Minister and Finance Minister of South Korea added that the South Korean crypto market has grown dramatically and is now competing with the national stock market. Hence this is a high time for taxation laws.
To better track and tax cryptocurrency in the country, the Financial Services Commission has decided that all crypto exchange platforms will be required to register with the government regulator and report transactions upon request. No wonder that many exchanges have closed in recent weeks and only a few of them have completed the registration.
Yet, there are plenty of crypto platforms that are experienced in getting licensed to operate in different locations. For example, the CEX.IO global crypto exchange registered as Money Services Businesses (MSB) with the FinCEN in the USA, has Distributed Ledger Technology license issued by the Gibraltar FSC, registered as Money Services Business in Canada. On this crypto exchange, you can legally purchase Bitcoin in the USA as well as buy other digital assets from almost any country.
NFT are not included in the tax
While taxing cryptocurrency makes sense from a government point of view, the omission of the NFT is worrying. Although sales in the NFT market recently surpassed $10 billion, South Koreans have yet to commit to taxing them. Still, if regulators change their minds and label NFTs as virtual assets in the future, they will be subject to new tax rules.
In an effort to ensure equitable treatment of investment in cryptocurrencies, the Austrian government announced that it would consider applying a 27.5% tax on crypto assets. This value is currently used to tax income from traditional stocks and bonds.
Austria intends to introduce this measure as part of a broader tax reform due in 2022. In an official statement, the Austrian Federal Ministry of Finance notes that there is still an imbalance in terms of cryptocurrency regulation compared to traditional stocks and bonds. They also insisted that the country’s new tax system would be the first in the EU to cover Bitcoin and other crypto and provide fair conditions for investors in various asset classes.
The department describes this regulatory move as an important step towards increasing the accessibility of decentralized fintech products. This is where crypto exchanges play an essential role. They can provide a simplified entry process to complicated services like staking, crypto loans, crypto payment solutions, and more.
Tax obligations should take effect on March 1, 2022, and will only apply to cryptocurrencies purchased after Feb 28, 2021. Digital coins purchased before this date are not subject to the new tax rules.
In the latter case, Austrian taxpayers must refer to general tax regulations and report cryptocurrency profits as income from speculative transactions.
In March 2020, India’s Supreme Court overturned a total cryptocurrency ban imposed by the central bank two years ago. Since then, many media reports suggest that the government is considering various solutions to regulate digital assets.
Currently, cryptocurrencies are tax-free in India. However, taxpayers must declare their profits on digital assets investments. The rules and regulations regarding the taxation of cryptocurrency are still in their early stages.
According to sources, India may not agree to a complete ban on cryptocurrency in India. The central government is poised to introduce a new bill during the winter session of parliament. Earlier, the Center formed a commission to study issues related to digital currencies and propose concrete actions in relation to cryptocurrencies.
Many experts think that this new bill is likely to ban all private cryptocurrencies in India, with a few exceptions. At the same time, India considers creating the official cryptocurrency.
However, many believe that most digital currencies, like Bitcoin, will be considered an asset class. For instance, Christine Boggiano, a Member of the Blockchain and Cryptoasset Council (BACC), said that profits generated from cryptocurrencies held for more than 36 months will be likely classified as long-term capital gains.
Regulatory discussions over the crypto ban in India have sparked panic selling on the major cryptocurrency exchange, leading to significant drops in prices for leading cryptocurrencies, including Bitcoin and Ether.
According to Slovenian media reports, the government begins public consultation on a draft regulating and taxation of cryptocurrencies.
The revisions are expected to simplify the taxation scheme for crypto assets. Due to current regulations, taxable income from virtual currency transactions depends on the circumstances in each case. The tax office must check the various transactions made by taxpayers between purchases, sales, and conversions.
In accordance with the upcoming updates, the state will introduce a flat tax of 10% for individuals who perform crypto-to-fiat exchanges. The same rate will apply to purchases made with digital assets. According to different resources, one of the key proposals is to decrease the capital tax and grow general tax breaks.
If approved, the new tax law will only affect individuals and not the institutions that own cryptocurrency as an asset. The Ministry of Finance estimates that the tax can accumulate from 100,000 to 500,000 EUR annually.