The Blockchain and Cryptocurrency on everyday basis make an effort to breach the resistance thrown there way, to achieve mainstream recognition and adoption. Recognizing their increasing outreach world’s biggest economies, UK, US and Japan are taking appropriate steps to regulate the virtual currencies and managing the taxes to be implied on them
Just recently, Japan relaxed it taxing laws around crypto businesses and trading. Following suit, reportedly, both US and UK are re-reviewing their laws that have the digital assets under high taxation.
The Japanese extant laws will categorize the proceeds from trading or mining as “miscellaneous income”, which will subject cryptocurrency to the taxation of up to 55 percent for the high-profit earner. While Japanese financial regulatory bodies have introduced a legal framework to guide the use of cryptocurrency, the taxation still largely remains relatively complicated.
On the other hand, the Chinese government was applying a crackdown of the assets, but China’s Court of Arbitration decreed cryptocurrency as a legally backed property asset. This change of attitude towards the digital assets implies that the digital transactions could soon overtake the erstwhile laws and regulations.
On the front of the United States, the US House Ways and Means committee has demanded the Internal Revenue Service (IRS), to define clearer definitions over the taxations of cryptocurrency. Looking at the confusion that surrounds taxing procedures in terms of cryptocurrency, the US committee has ensured that all laws governing the use of cryptocurrency will be simplified and streamlined tp allow seamless payment of taxes from crypto proceeds.
The US Government has almost always recognized cryptocurrency as legal and property assets, which carries similar legal weight other transactional currencies have. However, the taxing laws aren’t as clear as they should be, for one, this can be blamed on the inherent complications in the requirements for calculating and converting the currency.
Notably, reports in the first quarter of 2018 suggest that a large number of American crypto investors and traders did not willingly disclose their assets and the subsequent profits they incurred over the last year. The IRS has been receiving a backlash through letters and petitions from different quarters in the country. The demand is simple, to make clearer regulations on the use of cryptocurrency.
The crypto community, on the other hand, demands a review of the Cryptocurrency Tax Fairness Act, a bill first proposed last year that aims to make it much easier to use Bitcoin for everyday transactions. In response, the committee has asked the revenue body in an open letter to provide the public with clearer and up-to-date rules and guidance in the enforcement of tax policy against crypto taxpayers. The letter states:
“We therefore write again today to strongly urge the IRS to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”
Almost simultaneously to the US, the UK government also demanded clarifications on tax for crypto assets. England’s Cryptoassets Taskforce, an agency that comprising officials from England’s Treasury, Financial Conduct Authority and Bank of England was given the responsibility to solve this complex equation.
After much investigation over the potential benefits and threats to the country’s economic and financial sector, a report was issued by them that presents a reportedly balanced position on cryptocurrency and blockchain technology. The report demands an updated guidance for crypto taxpayers.
Economies across the globe are struggling to figure a suitable regulation that can enable them to fairly and seamlessly tax cryptocurrency. As the revenues from this sector are growing so is the need for putting a proper system in place is also increasing. Looking into the current scenario it can be predicted that in the coming years the tax laws pertaining to the digital assets will be diligently written, followed and reviewed.
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