The cryptocurrency offers a new lucrative income stream for governments
Cryptocurrency’s resistance to government control is counteracted by the fact that several governments, including Chile, Romania, Spain and South Africa, are seeking to tax the cryptographic assets. These countries are developing laws that require citizens to disclose annually the investments in cryptocurrencies that, in some cases, are carried out in the country and abroad, and that pay from 10 to 35 percent of the income tax for the cryptography gains.
Taxes of the cryptocurrency: Responsibility with the coming of age or loss of freedom?
Cryptographic taxation is occurring despite the lukewarm treatment of the virtual currency by governments as a good faith financial instrument that is useful for daily transactions. Some governments have issued skeptical statements in an attempt to discourage the use of cryptocurrency in their territory, al though others have committed themselves toresearch, proactive policies and legislation to make digital currencies an integral part of their economic strategy.
Government efforts to claim the wealth of the cryptocurrency suggest that digital currencies are at a point where the establishment recognizes its legitimacy and value to the state. However, the warm embrace of government tax agencies does not sit well with cryptographic visionaries for whom privacy and detachment from the state are fundamental values.
Chile’s new legislation, which allows it to tax cryptocurrencies as of April, has been interpreted by observers as an important step towards the legitimization of trade and the use of virtual currencies in the South American country, after a previous uncertainty. Before the last move to increase the tax base by targeting cryptographic assets, the Chile anjudiciary had refused to protect investments in cryptocurrencies, noting thatt hey were not legal tender, while questioning the fundamental qualities of virtual currencies.
In 2018, the country’s Supreme Court confirmed the closure of a bank of the cryptocurrency exchange accounts. He said the bank hadacted in accordance with laws on money laundering and terrorist financing, at reat allegedly posed by decentralized cryptocurrencies resistant to censorship. However, with the most recent development, it may be necessary for the judiciary to protect exchanges of cryptocurrencies and individual investors from interference, even if their motive is simply to keep as much ground as possible for the tax payer.
Cryptographic users face the enigma of autonomy
Cryptocurrency users face a dilemma where by the absolute autonomy of state interference denies them the protection of governments when banks and other institutions surpass the brand. However, recognition has a price in the way of giving a degree of privacy and control to governments.
Governments have previously excluded cryptocurrencies from their definition of what constitutes money, but this interpretation also seems to be evolving. While Chile exempted cryptocurrencies from the Value Added Tax laws in 2018 with the premise that they are “intangible assets”, now investors must pay taxes on profits generated by investments related to cryptography, according to the Tax Service Domestic of the country.
The opacity of the cryptocurrency is a source of concern for governments, since it can be used for tax evasion and money laundering. On the other hand, it can also be done with the fiat currency. Spain has identified 15,000 investors in cryptocurrencies that it will monitorto prevent illicit financial transactions and taxes for cryptocurrency transactions, as well as to retain its claim in cryptographic assets.
“The use by organized crime of the deep Internet for trafficking and trade in illicit products, as well as the use of bitcoin cryptocurrencies as a means of payment, is one of the most demanding challenges at present. To face this threat, the use by the tax agency’s research units of new information collection and analysis technologies will be improved in all types of networks, “reported the Spanish-language publication El País.
Spain’s antifraud law, drafted in October, will require cryptographic investors to declare all assets they own in the country and abroad. Profits from cryptocurrency transactions are currently subject to taxes under legislation that covers issues related to individual income taxes, with rates between 19 and 23 percent, depending on earnings.
The last contributor to join the club is Romania, which amended its tax laws this month, allowing it to begin taxing the profits of bitcoin investments at a rate of 10 percent. The improved tax code legislation classifies the profits generated by the purchase and sale of cryptocurrencies as “income from other sources” and, therefore, are subject to income tax, according to local media reports.
The evolution in governments’ perceptions of the cryptocurrency and the sub sequent demands of its owners seem inevitable. It depends on the cryptocurrency community to evolve in a way that allows it to handle the mixed blessings of state invasion. While concerns about crime are justified, the widespread encroachment by the government into space will resultin the loss of freedoms, such as the isolation of censorship.
Disclaimer: This press release is for informational purposes information does not constitute investment advice or an offer to invest. The views expressed in this article are those of the author and do not necessarily represent the views of infocoin, and should not beattributed to, Infocoin.