Crypto, taxes and regulations?

[teosanru]

Secondly, if you pay someone in form of bitcoin when you buy a service/good then how will his income be accounted for?

The second problem is the bigger one and I don't know how El Salvador would solve it. Initially, they might rely on self-declaration from the people but eventually, people could make it a big tax evasion loophole.

Why would this pose more troubles than a cash-based economy?
Fifty years ago we didn't have any of those payment types that could be traced other than checks, do you think there was 99% tax evasion?
Taxation worked in ancient Rome, it will work with bitcoin in Salvador also!

Actually yes there was a lot of Tax Evasion through cash routes was much easier in the earlier economy. Take the Indian Economy, for Instance, count of black money transactions was too high 50 years earlier and it has come significantly down with the adoption of banking for most of the payments.

Talking about Ancient Greek, we do not have any data related to that, we don't know what percentage of the money was floating around as black money but I am sure there must have been a lot of it.

Also with the advent of technology and such easy dissemination of knowledge these tricks would be easier to communicate to a lot of people. I am not saying there would be 99% tax evasion but even a 30-50% is enough to hurt any economy around the world.

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[Rajamuda]

If indeed all of that has happened, of course the government has prepared many things to respond, as a matter of imposing taxes on ordinary currencies. I don't think it will more bother us or causes more harm related to this case I guess, of course it has become a reasonable provision to advance the country and its people.

[fovofopawuco]

Because Crypto is linked to Fiat and most people exchange Crypto for Fiat,   governments will always impose regulations on it. Here in the UK if I exchange  Crypto for Fiat it is taxable If I exchange amounts which go over £12,300 I have to pay capital gains. From the Government website  "Anyone in the UK who holds crypto assets as a personal investment will be taxed on any profits made on these assets. Saying that you only have to pay capital gains tax on overall gains above the annual exempt amount. ... According to HMRC, the capital losses from cryptocurrency can be considered for the tax liability"  So Crypto is not as anonymous and free from government interference as people like to think if you are exchanging for Fiat.

In the UK, is tax only chargeable once it is exchanged for fiat. Is there currently any tax on sending/receiving crypto at the moment?

[stomachgrowls]

If businesses start to accept it as a form of payment, and people start getting paid with crypto, how are they going to tax it or regulate it?

Typical deductions..!

Lets talk first about businesses that do accept crypto then mostly it would be still taxed but in the form of fiat itself since those would be converted in fiat in the end of the day so its the same process.

For those who are working and accepting crypto as a form of payment then if we do talk deductions directly on crypto form at the current price rate on the time on being request or on point.

There are lots of factors which it makes a bit complicated compared when you are simply just receiving fiat and one of it would be volatility.

Taxation might end up on different form but the concept would be just all the same.

[Miaallen]

The moment crypto is accepted as a means of payment, the authorities will make or create a means of accessing the transactions to calculate the tax dues on them. All cryptocurrency centralised exchanges are paying tax on their profits which are made from crypto trading. If they can access the profits of these exchanges to know their tax dues, they can also access the dues when cryptocurrency is finally recognised as a means of payment.

[syedakhlaque]

Efforts are being made to legalize cryptocurrency. Many country countries of the world are designing a framework of rules and regulations to legalize cryptocurrency. In my country, Pakistan many individual, courts and federal Govt is working to legalize it. Especially a person Waqar,s efforts are appreciable. Who went to court to solve the issue about its legalization. Waqar zaka has its own mining farm in Balochistan province. It is hoped that it will be legal in Pakistan in all ways.

[hello_good_sir]

If businesses start to accept it as a form of payment, and people start getting paid with crypto, how are they going to tax it or regulate it?

Most countries I believe has a self assessment system whereby you are liable to report any of your taxable events.

If you are asking how they will be able to enforce it, I can think of a few ways:

a) If you are using a centralized payment processor, they probably obtain info from them.
b) If you get tipped off to authorities by others who suspect you're not fulfilling your tax liabilities, you could get some undercover tax agent visits.
c) You could get audited.

[zeuner]

in Germany every single trade is taxable, but all assets are tax-free after one year of holding.

The one year cutoff is only applicable to privately held assets. So, if a business accepts cryptocurrencies as payment as the OP suggests, holding them for a year might still leave the exchange rate related gains taxable.

[Lakai01]

The one year cutoff is only applicable to privately held assets. So, if a business accepts cryptocurrencies as payment as the OP suggests, holding them for a year might still leave the exchange rate related gains taxable.

that's very interesting, I didn't know that there was a distinction between privately/business held assets. Do you have a source for this? I would like to read the regulations on this carefully.

In Austria, it is already being discussed whether this holding period should be dropped, which would of course be a great pity. I hope, however, that this will not apply retroactively, but only to assets that were acquired from a certain point in time.

[YOSHIE]

If businesses start to accept it as a form of payment, and people start getting paid with crypto, how are they going to tax it or regulate it?

In terms of taxation, one of the easiest things for the government to implement, for example: transactions, per %, discounted prices when buying/selling goods can be directly taxed according to local government regulations, not a difficult thing to do.

If the government implements percentage laws on crypto, I guarantee you can't escape the reality of taxes, small and large your transaction taxes, must be deducted.