Can governments find a way to tax Bitcoin?

[DOGE12321]

I read recently in an article about Ecuador introducing its own digital money. Known as ‘Ecuador's Sistema de Dinero Electrónico’, it gave Ecuador the opportunity to control the cryptocurrencies market, in its own country, by enforcing regulations against Bitcoin. I was thinking about this new breakthrough, and I think it can be used to enforce a tax on Bitcoin if other countries adopted it. Of course, they can’t ban the usage of Bitcoin to enforce such a tax, but this method is plausible. Will it work? And if it does what does it mean for the future of Bitcoin?

[catia]

I read recently in an article about Ecuador introducing its own digital money. Known as ‘Ecuador's Sistema de Dinero Electrónico’, it gave Ecuador the opportunity to control the cryptocurrencies market, in its own country, by enforcing regulations against Bitcoin. I was thinking about this new breakthrough, and I think it can be used to enforce a tax on Bitcoin if other countries adopted it. Of course, they can’t ban the usage of Bitcoin to enforce such a tax, but this method is plausible. Will it work? And if it does what does it mean for the future of Bitcoin?

Can you post the article link?

[gracia0023]

I read recently in an article about Ecuador introducing its own digital money. Known as ‘Ecuador's Sistema de Dinero Electrónico’, it gave Ecuador the opportunity to control the cryptocurrencies market, in its own country, by enforcing regulations against Bitcoin. I was thinking about this new breakthrough, and I think it can be used to enforce a tax on Bitcoin if other countries adopted it. Of course, they can’t ban the usage of Bitcoin to enforce such a tax, but this method is plausible. Will it work? And if it does what does it mean for the future of Bitcoin?

I think government did't find ways to collect tax in bitcoin. Why? bitcoin is not a fiat and it is unpredictable. This is a cryptocurrency that used in electronic payment. And most of the country in this world, bitcoin didn't accepted as fiat.

[qwertyup23]

Here in my country, the government does not have any laws about taxing bitcoins but our central bank released a statement about regulating the use of it. I think that as time passes by more and more people will know about bitcoin and who knows, the government might tax it in the future.

[FlamingFingers]

If the government is like in the U.S., where you have to report every earning and pay taxes (which is something they certainly do), they would be able to tax your bitcoins. Imagine if they are monitoring your online activity, they would know most of your wallets/addresses, they would know the amount of bitcoins you have, and they would require you to pay for them.

[YIz]

Governments can really tax bitcoin when you decide to convert to fiat or buy real world stuff. otherwise they have no control over taxes on the blockchain.

[PX-Z]

Government cant do this stuff, but they can do this if people convert their bitcoin to fiat especially when depositing to their bank accounts I guess, or when they withdraw thic converted bitcoin from their bank accounts because they cant control tax on the network, I mean the blockchain network.

[ahmedjamal1998]

If they try to tax it they will find a way or another to do it.

Maybe tracking down your addresses/wallets might be difficult but since you need to convert these coins to fiat in order to buy stuff in the real world, at that point they will interrogate you since you receive cash on traceable services (paypal, skrill etc, ) which are all linked to your credit card.

[andrew24p]

I plan on paying taxes on my gains, I think if we were in a world where fiat didnt matter, then its possible to go forever without actually paying taxes, but when you move into fiat, they are going to notice if you suddenly become rich overnight.

[Kizaki]

Yes they will find and they will make way to earn money after legalizing  bitcoins in a country,government is now corrupt big taxes is the problem even small earners in business pay big taxes they want money from us they need us to feed them

[cengsuwuei]

if some country want tax bitcoin
the first must regulation bitcoin, without regulation is never tax
can follow japan, in there bitcoin user can tax fee, every transaction in exchanger another trade fee , charge tax fee too

[gabbie2010]

Ecuador introducing their own digital currency is a clever way of introducing tax in digital and virtual currencies. Exchanging bitcoin into their own digital currency will surely be taxed. If more countries can adopt such a method it will surely improve their economies by generating more revenue for the government leading to improved infrastructural development of that country.

[agustina2]

Government will not impose a tax to bitcoin most specifically the bitcoin uers. It's too much especially we dealing with the miners fees and the fees to the exchange itself when we used their service.

The one that will face the taxes are those bitcoin exchanges since they are regulated. Somehow safe because we know they are a registered company and no transparency at all and in case of fraudal activity, we can file a suit. But because they are the one being taxed, those exchanges will have some fees in some of their service in order to operate fully.

[Russlenat]

for me it is depend on the government on how they implement the rules and regulation to tax bitcoin in there country.
for us bitcoin earner we already paid the tax that added to the fee on every exchange or transaction we made.

[flower1024]

for me it is depend on the government on how they implement the rules and regulation to tax bitcoin in there country.
for us bitcoin earner we already paid the tax that added to the fee on every exchange or transaction we made.

Those fees are not for governments but governments want to tax for the money you earned from your investment profits. Usually, a tax will be paid only for the profits you earned from any investments but I don't know how governments will track at what price one bought bitcoins and whether they made profit or loss? If they can able to track these details then only they can ask to pay the tax otherwise it will be difficult to do it.

[GreenBits]

Government will not impose a tax to bitcoin most specifically the bitcoin uers. It's too much especially we dealing with the miners fees and the fees to the exchange itself when we used their service.

The one that will face the taxes are those bitcoin exchanges since they are regulated. Somehow safe because we know they are a registered company and no transparency at all and in case of fraudal activity, we can file a suit. But because they are the one being taxed, those exchanges will have some fees in some of their service in order to operate fully.

But I already thought bitcoin was being taxed? At least by my government, the US. Its called capital gains tax, and it's one of the reason they made bitcoin property instead of money:

https://www.forbes.com/sites/greatspeculations/2017/02/21/if-you-traded-bitcoin-you-should-report-capital-gains-to-the-irs/

The IRS considers cryptocurrencies, including Bitcoin, to be “intangible property.” Investors and traders holding cryptocurrency as a capital asset should use capital gain or loss tax treatment on sales and exchanges, with the realization method. For example, if you buy Bitcoins with U.S. dollars and later sell them for U.S. dollars, a capital gain or loss needs to be reported on that transaction.

Americans also trade Bitcoins or leveraged Bitcoin contracts on Bitcoin exchanges, and they should report realized capital gains and losses on each trade, even if the trader doesn’t convert underlying Bitcoin back into U.S. dollars.

It’s similar to having a foreign-based brokerage account, denominated in a foreign currency (i.e., Euros), where a trader buys and sells European equities held in Euros, and does not convert Euros back to U.S. dollars during the year. Two choices for tax reporting: Convert Bitcoin to U.S. dollars on each purchase and sale transaction using the Bitcoin market price that day denominated in U.S. dollars, or use Bitcoin as a functional currency, using an average Bitcoin vs. U.S. dollar conversion rate for the tax year.

So BTC careful! (See what I did there? )

[biter66]

I think most of us know that our governments will do and tax what it wants. If there is money to be made the government will find a way to gain $$ from tax payers. So, yes..I believe they will eventually fully tax what is becoming a source of income for some people.

[Tyrantt]

@GreenBits   So basically they can only tax it once the bitcoins are sold for fiat? There's no way for them to tax it if the bitcoins are mined or if the payments made in btc.

[andrei56]

If the government is like in the U.S., where you have to report every earning and pay taxes (which is something they certainly do), they would be able to tax your bitcoins. Imagine if they are monitoring your online activity, they would know most of your wallets/addresses, they would know the amount of bitcoins you have, and they would require you to pay for them.

The difference here is we are talking about Ecuador and not the US, the US with its great technology and economic power can enforce all the laws they pass but a third world country where even some of the most basics laws are not observed will never be able to enforce laws like that since it will be very costly to try to make people comply.

[jakelyson]

There is very little they can do to track bitcoin transactions much less tracking each person if they have bitcoin. Maybe they can still tax the items you buy using bitcoin but put like an income tax on bitcoin, that will be a stretch.