Nodar Khaduri, the finance minister of Georgia signs a bill that will exempt cryptocurrencies from value-added tax (VAT), as reported by Bitcoin.com on July 13.
As Per the report, the bill aims at regulating the taxation of entities that trade or mine cryptocurrencies. The bill will be in effect from the end of June. The bill puts up a definition of decentralized currency as the following:
“Cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”
The bill enable the country’s citizend to exchange cryptocurrencies for fiat currency without subjecting the transactions yo VAT. Though Khaduri also pointed that the Georgian lari will solely be the legal tender in Georgia and just like other foreign fiat currencies, cryptos will not be allowed for payments.
The article further specifies that mining companies will still have to pay VAT unless they are registered abroad. Notably this may result in local mining businesses relocating.
The EU Court of Justice ruled in October 2015 that Bitcoin exchanges was exempted from VAT in a landmark verdict. The following month, Stefano Capaccioli, an Italian lawyer specialized in gold and cryptocurrencies stated in a guest post on Cointelegraph:
“The Decision is of historic importance: it clarifies all doubts and removes the confusion on the applicability of consumption taxes to bitcoin, considering cryptocurrencies as a simple means of payment and, under a VAT perspective, similar to a foreign currency. […] The Judgment is the practical demonstration that bitcoin needs no specific regulation, but only the interpretation of existing legislation because bitcoin does not fall in any legal vacuum.”
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