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Spain’s Government Has Been Formulating A Bill Mandating The Disclosure Of Crypto Holdings

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Cryptocurrencies continue to flourish and take over the globe with its charm, however, the illicit activities, as well as tax evasions, have also started to surge. While the crypto market has its own upside, the downside continues to haunt the industry. With tax evasions on the rise, governments of several countries have been making amendments to their existing laws or even coming up with new ones. Spain is the latest country to join the list with its recent disclosure.

Spain Plans Ahead For A Crack Down

With an intention of complying with the demands of the EU, Spain has been working towards the same. The Spanish government recently revealed that it was formulating a bill that would mandate crypto holders to unveil both their holdings as well as gains procured through cryptocurrencies. The government’s spokeswoman, Maria Jesus Montero further suggested that the latest bill was on par with the government’s intention of busting a tax fraud.

The draft for the “anti-fraud law” put forth by the Ministry of Finance was reportedly given a green light by the government. The spokeswoman further added,

“[..]the identification of the holders and the balances that these virtual currencies contribute. It is considered compulsory for people and companies to inform the Tax Agency about this operation.”

While crypto has been upholding decentralization, the latest obligation by the Spanish government could steer away from the former. Furthermore, citizens of the country with currency abroad would also be required to report their holdings.

Back in June, the government commenced its operations pertaining to anti-money laundering which required crypto companies to engage in registration. The EU has been laying out several regulations pertaining to cryptocurrencies. More recently, the Union announced that the European Central Bank was the only one allowed to issue currencies. Platforms like Facebook should not be given the leeway to issue any form of currency.

Switzerland’s Zug Canton will Accept Bitcoin and Ether for Tax Settlement

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Zug has emerged as one of the most crucial cryptocurrency hubs in the world. Taking the crypto game to a notch higher is Switzerland’s Canton of Zug administration which announced last week that it will start accepting cryptocurrency for tax payments.

According to Bloomberg’s report, the Canton was quoted saying,

“Tax settlement by means of crypto currency will be available to both companies and private individuals up to an amount of 100,000 Swiss francs [$109,670]”

From February 2021, its citizens and companies will be able to pay up to 100,000 CHF [around $109,000] of their taxes in either Bitcoin [BTC] or Ether [ETH]. With this, it becomes the first Swiss canton to offer the option of paying taxes with cryptocurrencies.

Cantonal Finance Director Heinz Taennler reportedly stated,

“We are not taking any risks with the new payment method, as we always receive the amount in Swiss francs, even when paying in Bitcoin or Ether.

For this initiative, Swiss authorities have reportedly collaborated with the Zug-bases crypto finance firm Bitcoin Suisse to convert crypto payments into Swiss francs and then transfer to the tax office. Ahead of the February launch, a trial run for the pilot of the tax scheme will be rolled out in the coming week.

Thanks to flexible regulations and an apt political system, the country has established itself as home to emerging crypto firms and Zug’s crypto valley has accommodated various cryptocurrency businesses. One of the main selling points for foreign businesses looking for opportunities in the region because of the already existing large multinational companies in Zug which open huge possibilities, from easier access to funding as well as a wider network for partnerships and collaboration.

This news comes after Sygnum, a Switzerland-based cryptocurrency bank, received approval from the Swiss Financial Market Supervisory Authority [FINMA] for its digital asset trading facility. Earlier in June this year, another Swiss-based transaction bank, called InCore Bank, became the first bank in the country to offer financial service providers and institutions worldwide after receiving a green light from the watchdog to trade, hold, transfer and generate [tokenized] digital assets.

Besides, FINMA had earlier issued two specific guidelines on initial coin offerings [ICOs], in February 2018, and supplemented in September 2019.

Bitcoin, Ether Will Soon Be Accepted For Tax Payments in Swiss Canton Zug

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Just a few years ago, cryptocurrencies were viewed merely as assets that paved the way for illicit activities. Even though many authorities still continue to denounce digital assets, the ones in support of these assets have witnessed an increase. Currently, there are many instances that indicate that cryptocurrencies will soon find a prominent position in the global economy. A piece of recent news from Switzerland stands as substantial proof of the same.

Taxes In Crypto

On Thursday, one of the states of among the 25 others of the Swiss Confederation, the canton of Zug announced the acceptance of prominent cryptocurrencies, Bitcoin [BTC] as well as Ether [ETH] for tax payments. The announcement further revealed that the Zug administration had collaborated with Zug-based crypto-financial company Bitcoin Suisse. This initiative, however, will commence from February 2021.

Speaking about the canton’s latest move towards technological innovation, Heinz Tannler, the Finance Director pointed out the necessity for the inclusion of crypto in everyday life. He added,

“As the home of the Crypto Valley, it is important to us to further promote and simplify the use of crypto currencies in everyday life. We can make one by being able to pay tax debts with Bitcoin or Ether big step in this direction.”

Zug would reportedly be the first Swiss canton to accept cryptocurrencies for tax payments. The canton’s official website further highlighted that both individuals, as well as companies, could utilize this forthcoming change. Citizens who would wish to pay taxes via crypto are required to let the tax administration beforehand. Soon after this, the taxpayers would be given a QR code via email. To prevent any sort of impact on the payments considering the volatile nature of cryptocurrencies, the Finance Director further stated,

“We are not taking any risks with the new payment method, as we always receive the amount in Swiss francs even when paying in Bitcoin or Ether.”

Bitcoin Suisse is not new to the crypto-verse. The platform made its way into the market back in 2013 and has been a prominent platform of the “Crypto Valley.” The CEO of Bitcoin Suisse, Arthur Vayloyan also commented on its latest collaboration and said,

“The combination of trading technology and payment transactions with cryptocurrencies enables us to offer the taxpayer a good user experience and to offer the canton of Zug a mature service.”

Previously, Ohio created a buzz after it announced that it would accept crypto for tax payments. However, only two companies were paying taxes through crypto and the website was eventually taken down.

South Korea Becomes Latest Country to Consider Cryptocurrency Taxation, Final Decision to be Made in September

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The cryptocurrency industry has been under the scanner of financial regulators since it first came to the limelight. With the increasing popularity of virtual assets such as Bitcoin, countries across the globe have begun to take steps to see that it is being treated as an asset under their purview.

Just recently, South Korea announced that it will join the list of countries that tax cryptocurrencies. Officials in the South Korean financial sphere have stated that taxation will always be present wherever there is a source of income. South Korea first came up with the idea of cryptocurrency taxation in 2017 but was then shelved due to implementation issues.

The South Korean Ministry of Strategy and Finance has made it clear that traders, ICOs, and mining operations will all have to tax on their profits. Officials of the finance authority shall prepare an amendment to the tax rules to ensure that cryptocurrencies are now included within the umbrella. The first announcement relating to the new rule is expected to take place in September, with regular assembly presentations planned for September.

Reports added that the Ministry of Finance also intended to consider taxes on capital gains and other taxes on income for both domestic and foreign countries. South Korean financial officials also pointed out that other countries have followed the tax model, with the US and France as main examples. A Ministry of Information and Technology said:

“We are looking at ways to tax if profits are made through transactions, mining, and public offerings (ICOs) in accordance with the principle of ‘taxation where income is located’. There are few countries that impose VAT and transaction taxes abroad, and they are not considering the introduction.”

Although the government sees taxation as a viable option, cryptocurrency experts say otherwise. The imposition of such a task becomes difficult because it is possible to avoid a legal network by carrying out interpersonal transactions. After South Korea first considered cryptocurrency taxation, 20 countries have implemented the same concept.

One of the main reasons for the slowdown is the sheer scale and complexity of the tax burden. Even the Chairman of the Korea Blockchain Association Tax Commission has confirmed that it would take at least 3-4 years for a concrete tax model to come to fruition. South Korea is also host to the world’s largest cryptocurrency exchanges. If the new tax laws are to come into effect early, it will be interesting to see how these bodies will react to the changes.

Taxing Bitcoin And Other Cryptocurrencies in Russia in Mikhail Mishustin’s Sights; Community Split

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Several regions across the globe have their own rules and regulations about cryptocurrencies: some love it, some hate it and some are still on the fence. The latest focus point was on Russia, a country known to be in two minds about Bitcoin.

The last few weeks have been chaotic in the Kremlin due to a massive cabinet reshuffle. This also resulted in former Prime Minister Dmitry Medvedev being replaced by Mikhail Mishustin. The new PM is a former tax man and has made some strong comments about Bitcoin.

Mishustin’s appointment was seen as a step taken by Vladimir Putin to ensure an airtight economy. This was the reason why Bitcoin and the cryptocurrency market was of such key importance to Mishustin. He had earlier served as the director of the Russian Internal Revenue Services with a keen eye to stop financial fraud.

In a bid to make cryptocurrency transactions safer, the new Prime Minister wants all crypto-related operations to be taxed. This step was proposed to keep a close watch on the ways in which digital assets are spent. Mishustin claimed that it was imperative such taxation laws were implemented in regions where cryptocurrencies were used.

He believed that such a step would make it easier to access any economic consequences using digital assets. The government official made these comments just a day after he replaced his former titleholder.

Cracking down on Bitcoin has always been difficult because of its decentralized nature but taxing it has been one of the few ways to keep tabs on it. Even France imposed taxes on Bitcoin and other cryptocurrency expenditures. Officials involved in the cryptocurrency field in Russia were still doubtful about how the new rules will affect the industry. Anti Danilevski, the founder of the Kick Ecosystem stated:

“I think the arrival of new Prime Minister Mikhail Mishustin increases the likelihood of Russia putting further protections in place for crypto (investors) and enterprises. What they do now is critical.”

The Kick founder believed that taxing digital assets makes it more legitimate as it invites the confidence of institutional investors. The barrier for mainstream players has always been regulatory uncertainty and Russia seems to be on the verge of removing that.

Die-hard fans of crypto will take the latest news with a pinch of salt because of the government’s involvement. According to them, the government was scared of assets that did not require a central bank and flew right above them.

The new Russia Prime Minister had a different set of thought processes. Mishustin claimed that the underlying blockchain technology was useful but it still threatened the working fabric of several other industries. Speaking during a recent interview he said:

“These digital platforms offer a new efficiency, but this is a threat to entire sectors of the economy. Airbnb is great, but it is a threat to hotels. What will happen to the automotive market due to the emergence of platforms and unmanned vehicles, for instance…nobody knows.”

As per other reports, South Korea has also joined the ‘crypto tax’ bandwagon with Russia. The Korean Finance Ministry is reportedly on the verge of creating a plan that would see cryptocurrency being taxed like regular assets. Some have speculated that the rate would be about 20 percent, but nothing has been confirmed as of yet.

At a time when political bodies of countries were considering cryptocurrencies as assets, followers of the industry are in awe of how far it has come. From being a niche product to being discussed in parliament halls, the crypto community was confident that they were here to stay.

South Korea Is About To Levy a 20% tax on Cryptocurrencies

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South Korea’s cryptocurrency regulation has seen tremendous developments in the last 2 years. However, Park Yong-jin, a member of the national policy committee from the ruling Democratic Party, brought in the first-ever taxation bill in South Korea.

The Ministry of Economics and Finance recently ordered the department of income tax to start reviewing the cryptocurrency taxation plan as per the report published by one of the local South Korean news channels, Pulse. South Korea’s government is planning to impose a 20% tax on all the income generated from Cryptocurrencies. 

Nevertheless, the income tax department will likely consider all the income generated by Cryptocurrencies as ‘Other Income’ instead of ‘Capital Gains’. Interestingly, this news has brought a healthy amount of consideration in the Korean Expert community.

If implemented, all the Cryptocurrency income will come under the banner of ‘Other Income’. The income tax department will collect a 20% tax on 40% of the total income. The rest 60% comes under the band of tax deduction.

Reportedly, the government is yet to finalize the working procedure. But, it is for sure that income generated with Cryptocurrencies will be labeled as ‘Other Income’. Earlier it was considered as capital gains.

The National Tax Service (NTS), the Korean tax authority, is supposedly waiting for a green signal from the government authorities. Once levied, they will be allowed to start imposing a tax on Cryptocurrency gains on an immediate effect.

Consequently, Bithumb, a South Korean Cryptocurrency Exchange, was asked to pay $69 million as a tax by NTS. This was the first of its case where NTS levied the taxation on Cryptocurrency gains under the label of other income.  More so, Bithumb is planning to take the authorities to court for negating the amount inflict on them by NTS. They are in the mood to nullify the tax. 

Meanwhile, the Korean authorities have started marking gains earned by the immigrants from virtual assets as the source of ‘Other Income’. They have been actively collecting the tax indirectly at the time of any exchange of Cryptocurrency.

It is now a game of curiosity about what the government decides and how NTS will shift its gears.