[2018-04-13] Latvia Recognizes Cryptocurrencies in Order to Tax Them

[FollowSynergy]

Trying to take its share of the profits, the government of Latvia may accept cryptocurrencies as a legal means of exchange. This year’s tax filing campaign is underway and officials don’t have much time. Two parliamentary commissions and the Ministry of Finance have expressed their views on the matter this week. Latvians may very soon owe the state tax on their gains from crypto transactions.

Cryptocurrencies Deemed Dangerous but Taxable

According to the Latvian Finance Ministry, 20% tax can be imposed on capital gains from deals with cryptocurrencies. Its representatives announced the proposal during a meeting with deputies from the Parliamentary Budget and Taxation Committee on Wednesday.

Some lawmakers reminded their colleagues and constituents that cryptocurrencies are not considered a legal tender in the Baltic state and come with speculative bubbles and financial pyramids. Members of the Financial and Capital Markets Committee, however, noted that cryptos like bitcoin can “function as a means of exchange”.

The Ministry of Finance also revealed that the Latvian government is mulling over comprehensive cryptocurrency regulations. A working group set up by Prime-Minister Māris Kučinskis has been tasked to prepare the proposals. According to the Baltic Reporter, it will study market risks, but also evaluate potential benefits associated with cryptocurrencies.

Policy makers have often criticized cryptos for failing to perform one or more of the functions of fiat money – means of payment, medium of exchange, unit of account, and store of value. It seems, though, that when budget revenues are in mind, the requirements towards “virtual money” are not that strict. The “means of exchange” labeling now gives Latvian authorities an opportunity to tax cryptocurrency transactions. Maybe if they think about VAT, a “means of payment” status will also be attributed. No tax is currently due on crypto purchases of goods and services in Latvia.

Cryptocurrencies are not covered by any Latvian law but authorities in Riga say revenues from crypto trading are subject to personal and corporate income tax. The country has a flat income tax rate of 23%. Incomes from dividends and interest are taxed at 10%. 15% tax is due on capital gains from shares, real estate, and intellectual property. The standard rate of Value Added Tax is 21%. Financial transactions are exempt from VAT. Tax returns in Latvia are filed between March 1 and June 1 of the year following the taxation year.

Full article: https://news.bitcoin.com/latvia-recognizes-cryptocurrencies-in-order-to-tax-them/

[greeklogos]

Well,  people who have crypto still prefer to exchange it to fiat before to spend, so it is normal wish of the government to have profit, in the form of tax, from this value of money which are passing through the system without any taxation now. The process of digital profit taxation seems normal and logical to me, I doubt that in 5-10 years on the Earth will stay a lot of places with tax free system for crypto currencies.

[Coffee135]

Well,  people who have crypto still prefer to exchange it to fiat before to spend, so it is normal wish of the government to have profit, in the form of tax, from this value of money which are passing through the system without any taxation now. The process of digital profit taxation seems normal and logical to me, I doubt that in 5-10 years on the Earth will stay a lot of places with tax free system for crypto currencies.

All this will end after the issue of using bitcoins as a currency is resolved. Of course, governments always want to take money from their citizens. Cryptocurrencies are no exception. But all attempts to do this are possible only when we use the exchange for Fiat. This is the territory of the state. Transactions for bitcoins can not be controlled and they will always remain tax-free.

[Egoitss]

Actually they are just debating what to do with them, one organization thinks that there is no need for regulations taxa-tors think that they need, because right now noone knows how to tax income from crypto. What I think best way will be to pay capital gain income, no stress for that.