Category Archives: taxation

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Japanese Committee Fights to Simplify Crypto Tax

One Japanese political committee has taken it upon itself to fight for a simplified cryptocurrency tax plan.

The Government Taxation Investigation Committee (GTIC), which serves as an advisory body to the Prime Minister, began discussions on Wednesday to propose a simplified cryptocurrency tax payment plan, which they say is currently unnecessarily complex in Japan.

The committee argues that because there are many kinds of cryptocurrency profits that require taxation alongside capital gains. Taxpayers are failing to declare the correct total in their tax returns as the process is simply too complex.

The profit obtained by selling cryptocurrency is currently accounted for as miscellaneous income, with crypto earnings over JPY 200,000 (USD 1,783) subject to income tax.

However, cryptocurrency is taxed not only on the gains from the disparity between the acquisition price and the selling price but also on the profit obtained by its exchange with other virtual currency or conversion to fiat. Even if a product is purchased using the digital currency which then accrues an unexpected financial appreciation, it remains subject to taxation.

Another issue arises as the method of storing the transaction history data necessary for the profit calculation is different with each cryptocurrency exchange company, meaning it is particularly challenging for Japanese taxpayers to configure the correct totals.

Offering a solution

GTIC says that a whole new system is required that can accurately reflect the income and profit in an accessible way.

Local news outlet Sankei reports that officials from GTIC shared in a press conference: “Since it is necessary to take into consideration the framework other than the taxation system and business practices as well, we will hold a small expert meeting and outside opinions. I will deepen the discussion while listening. ”

The future system would be required to “grasp the asset price appropriately.”

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Take a French Leave from Taxes, or How to Keep Your Cryptocurrency Safe from the Taxman

When cryptocurrencies go through their periodic pumps, cryptocurrency investors are placed in a position of having to stop thinking so much about how to make more profit and start worrying more about how to protect their gains from the avaricious reach of the taxman. Depending on the laws in specific localities, and on the amount of trading an investor does, tax obligations can double or more. Experts from international company Worldcore have given a lot of thought to how investors can protect their earnings from unfair taxation.

According to a recent survey conducted by Worldcore, the majority of both novice and experienced traders are already familiar with, if not actively investing in, cryptocurrencies. Fully 89% of bankcard holders are aware of what cryptocurrencies are – but they may not be as aware of the legal and taxation grey area their crypto transactions and trades are in. This is as true for experienced investors and tax professionals as it is for novices.

The one thing we are sure of is that there is going to be a continued tightening of national regulations regarding cryptocurrencies. Unfortunately, this is likely to further confuse rather than clarify the situation as different countries take different approaches. Cryptocurrencies may be borderless, but the laws that apply to them are not – and the message to the user is to beware out there.

For instance, the US tax authority, the IRS, in 2014 issued a ruling that cryptocurrencies should be regarded as property for tax purposes. This means that converting cryptocurrencies to fiat is a taxable event, requiring the individual to calculate loss and gains for each purchase and sale. At first, there did seem to be a loophole, known as a like-kind exchange. This would allow any conversion of one cryptocurrency to another to be considered non-taxable as these things are essentially the same kind of item. As of 2018, though, this loophole has been closed with only real estate being recognized for like-kind exchanges.

For US taxpayers, this has upped the ante. If they don’t comply with tax laws, as vague as they might still be, they may be subject to severe penalties. The IRS last year sent shockwaves through the community when it served Coinbase, the largest US cryptocurrency exchange, to hand over all trade data for its then over 500,000 users. A court battle ensued and the number of accounts that had their information turned over was dropped to a “mere 14,000”, but it was concerning all the same.

Alexey Nasonov, CEO of Worldcore, had this to say on the matter: “I suppose that we will witness similar actions throughout the world. More and more, regulators will want to access to international cryptocurrency exchanges, users’ accounts. It’s all happening because under 1,000 people were reported to have declared their cryptocurrency in the US in 2015, even though Coinbase’s client database at the time was about 2.7 million. It is currently reported to be over 13 million, putting it on par with some of the largest international banks!”

Rules in other countries vary. In Canada, cryptocurrency purchases and sales are taxable as capital gains/losses. In the UK, crypto-assets fall under the scope of either profit tax, corporate tax, income tax or capital gain tax, depending on whether you’re a company, a professional trader or an amateur investor. In Switzerland, amateur investors are not taxed at all, while in Australia cryptocurrency used to be subject to double-taxation due to the fact that, as property, it was subject to both VAT at point of purchase, and subject to capital gains tax. In Norway and Bulgaria, cryptocurrency is recognized as a financial asset, and the revenue from trades or sales on exchanges is subject to a 25% tax and 10% respectively. In Bulgaria, though, you can take the matter up with the regulator and keep small exchange gains tax-free.

Because we are a company with operations in many countries, Worldcore is uniquely positioned to assess best practices when trying to figure how to stay safe from regulators and keep as much of your cryptocurrency gains as possible, no matter where you live or operate. Here are a few simple rules we’ve come up with:

  1. Remember that it is always the responsibility of the taxpayer to know what their obligations are and fulfill them. Get a hold of your country’s regulations and consult with a professional if necessary.
  2. Make it a habit to log and track your cryptocurrency purchases, sales, and trades. Note the date and time you acquired the currency, for what price, when you sold it and how much you got for it. For small amounts and HODLers, a simple excel file might suffice.
  3. For large investors who trade actively, consider investing in specialized software or in hiring professional tax attorney or accountant.
  4. Don’t try to conceal transactions. There are multiple ways for tax officials to get information on trades – whether that be from the exchanges themselves or even by analyzing blockchains – so it’s better to be safe than sorry. Right now the rules may be vague, but once regulators catch up, the fines you could potentially face may be devastating.
  5. In most countries, giving cryptocurrency as a gift (check for allowable limits) is not taxed. This might be one way to protect your cryptocurrency gains while benefiting those around you.
  6. In those countries where cryptocurrency is considered property or as an asset, taxes will depend on how long you’ve owned it. In both Germany and the US, after one year the asset is considered long-term and will be taxed at a considerably lower rate.

Cryptocurrency has often been characterized as “the Wild West”’ meaning that no laws apply. Although that once might have been true, laws are slowly creeping into the cryptocurrency space. It’s the wise person who sees the trend and takes steps to keep their assets, and themselves, safe.

 

Article reproduced courtesy of Worldcore

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The post Take a French Leave from Taxes, or How to Keep Your Cryptocurrency Safe from the Taxman appeared first on BitcoinNews.com.

Alec Ross and Jonathan Luff – Why Bitcoin Is On The Money

Alec Ross and Jonathan Luff – Why Bitcoin Is On The Money:

The Telegraph (UK) published an essay by Alec Ross (@AlecJRoss) and Jonathan Luff (@JILuff) on the geopolitics of Bitcoin.  Excerpts:

“An interesting advert appeared in a handbook accompanying [last week’s G8 meeting], placed by a company that was until recently known only to a small number of technology entrepreneurs and early adopters. The advertiser was Mt Gox.”

“Alternative currencies are, of course, nothing new. Many Londoners carry an Oyster Card, which they load with traditional currency and then exchange for travel.”

“In the developing world, value transfer via SMS is already replacing cash. With virtual currencies like BitCoin now operable without the need for a bank account, why would you open one?”

“The rise of digital currencies like BitCoin threatens to render obsolete even the modest progress made by the G8. BitCoin’s distributed network structure makes it hard for any one country or group of countries to regulate its activities.”

“Unless the issues that BitCoin raises are addressed in a thoughtful and proactive manner by existing authorities, the disintermediating power of technology is likely to have a disruptive impact on currency systems and those that regulate and rely on them.”

 – http://bit.ly/145sz0P
 – http://bitcointalk.org/index.php?topic=242385.0

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