Crypto Tax Question

[BlackHatCoiner]

If you're living in a crypto-friendly country, address a tax consultant with knowledge on crypto. In general, in most countries, you have to report realized profit when selling crypto, and it's not as simple as "the exchange takes over my tax obligations".

[Ever-young]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

That should depend on the tax regulation in your country. If the regulators ask the crypto exchange to debit their citizens on their behalf and report it at the end of every month, then the citizens don't have to do it again, unless what you are just going to do is a proper account for the agent to check and match the record that the exchange submits to them. If it corresponds or not, it might be necessary. Like I said, the action should be based on the crypto tax law in your country.

[suzanne5223]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

You posted that the tax was deducted by the exchange automatically, then no need to pay any tax after the capital gain tax or the tax that your country is deducting.

Technically, you have a point about having the belief that there's no need to pay tax after the CEX platform has deducted the tax but to avoid getting into trouble with issues that may arise about tax defraud in the future it is better to consult the relative attorney, or law firm in charge of crypto tax paying in your geographical region to be sure if the CEX are totally in charge of the tax deduction because the crypto tax rules of EU is different from the US.

[BABY SHOES]

• https://x.com/indodax/status/1874767852915605882
• https://x.com/Tokocrypto/status/1875085991750566339
• https://x.com/PintuID/status/1875110729952694697

Actually, our local exchange has taken care of all taxes to the government including how much our profits are in crypto trading, the exchange itself will report to the government.

So for me there is no need to submit a separate tax again because everything has been done by the exchange.

And the link above is where the crypto tax in Indonesia went up, since January 1-3 according to Indonesian government regulations.

[NotFuzzyWarm]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

All depends on what country you live in....
Folks, ya'll do realize that not every country has the same tax laws right?

[Davidvictorson]

Wow, this is my first time to hear about this. Are you sure that the exchange they deduct is for taxes or just maybe a withdrawal fee?

This is the first notification from last year which has now been implemented. The government of my country insisted that for the exchange to still continue their business in Nigeria they must collect tax from every Nigerian users of their platform.
Dear KuCoin User,

We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (“VAT”) at a rate of 7.5% on transaction fees in each trade for users whose KYC information is registered in Nigeria.

Example Calculation:

Transaction: Buy 1,000 USDT worth of BTC
Fee: 1 USDT (0.1% fee rate)
Tax: 0.075 USDT (7.5% of the fee)
Net Amount for Transaction:998.925 USDT

https://www.kucoin.com/announcement/notification-regarding-the-activation-of-tax-collection-for-nigerian-users

[NotFuzzyWarm]

@ Op
Interesting that the Nigerian gov taxes buying crypto. In the US the IRS only cares about income from sales and that is based on profit/loss incurred when selling it (edit: or using it to buy something).

In your case it raises the question: does the gov again collect another 7.5% when you sell it or use it to buy something? In short, in Nigeria are you double taxed on crypto? Do they give a credit from selling at a loss? Best advice is to talk to a tax professional in your country.

[franky1]

• https://x.com/indodax/status/1874767852915605882
• https://x.com/Tokocrypto/status/1875085991750566339
• https://x.com/PintuID/status/1875110729952694697

Actually, our local exchange has taken care of all taxes to the government including how much our profits are in crypto trading, the exchange itself will report to the government.

So for me there is no need to submit a separate tax again because everything has been done by the exchange.

And the link above is where the crypto tax in Indonesia went up, since January 1-3 according to Indonesian government regulations.

if your tax is deducted at source you might actually want to file your own self assessment at year-end, because sometimes you can calculate some capital losses from other sources to get your total personal tax demands down and then claim a rebate.. no point giving too much to the tax man if the service that deducts at source is taking the tax at premium rate

[Pi-network314159]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

Op I think any amount deducted from any transaction  done on different exchange is used to pay tax to the government since the exchange can not use their fund to Pay tax. I believe that the tax is calculated in a way that exchanges and government have a percentage shearing formula. Government cant tax individual seperatly except with the help of exchange. Since they don't have access to people cryptocurrency exchange like the banking fiat system.

[GreatArkansas]

Wow, this is my first time to hear about this. Are you sure that the exchange they deduct is for taxes or just maybe a withdrawal fee?

This is the first notification from last year which has now been implemented. The government of my country insisted that for the exchange to still continue their business in Nigeria they must collect tax from every Nigerian users of their platform.
Dear KuCoin User,

We are writing to inform you of an important regulatory update that impacts our users from the Republic of Nigeria. Starting from July 8th, 2024, we will begin collecting a Value-Added Tax (“VAT”) at a rate of 7.5% on transaction fees in each trade for users whose KYC information is registered in Nigeria.

Example Calculation:

Transaction: Buy 1,000 USDT worth of BTC
Fee: 1 USDT (0.1% fee rate)
Tax: 0.075 USDT (7.5% of the fee)
Net Amount for Transaction:998.925 USDT

https://www.kucoin.com/announcement/notification-regarding-the-activation-of-tax-collection-for-nigerian-users

This makes sense, just wow because this is my first time to see an exchange like Kucoin to do this.

Also as per article: "Please note that the VAT will be applied to the transaction fees in each trade, not the transaction amount, and covers all transaction types on KuCoin platform."

Now, I am curious about the transparency between the exchanges like Kucoin and the Nigeria government, how can the Nigeria government be sure that all transactions are covered with tax like, could corruption happen here? In exchange side or government side?

[Lucius]

~snip~
In your case it raises the question: does the gov again collect another 7.5% when you sell it or use it to buy something? In short, in Nigeria are you double taxed on crypto? Do they give a credit from selling at a loss? Best advice is to talk to a tax professional in your country.

It seems to me that someone in their government just figured out how to get an additional source of revenue by taxing every transaction with VAT. If the same tax exists for all goods and services in Nigeria (and it seems to me that there is), then I don't see how paying tax twice can be avoided here.

However, most people who sell crypto and pay income tax also pay VAT on practically every transaction when they buy something. For example, by law I have to pay 10% + surtax on crypto profits, and then I also pay 25% VAT on most goods and services - although there are some categories that have VAT of 5% and 13%.

[avikz]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

This rule is different for different countries. In my country, the exchanges deduct 1% of the transaction value as "Tax deducted at source" or TDS. This is to notify the income tax department about my crypto transaction. So I must file my income tax duly notifying the transaction volume and the remaining taxes need to be paid which is 30% in my country.

Now, if in your country, the exchanges deduct complete tax upfront, you will still need to file a formal tax return and you need to notify the tax deductions made for crypto transactions. You better consult about it with a crypto tax professional or a Tax lawyer for better clarity.

[pakhitheboss]

I believe that the tax is calculated in a way that exchanges and government have a percentage shearing formula. Government cant tax individual seperatly except with the help of exchange. Since they don't have access to people cryptocurrency exchange like the banking fiat system.

What are you trying to do here when you haven't had the slightest idea of how taxation works? Please don't come with a justification as it will prove you wrong again and again. An exchange cannot have a percentage share of government tax. Tax is meant for the government, it is why they ask for a percentage. A government will never share that amount with a private entity.

BTW, your answer doesn't look like you know anything about tax. It surely looks like you are here on this thread to cover your signature campaign quota. Did you even read, what you wrote on this thread? I don't think you even understand what this discussion is all about.

[shield132]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

You should know what the rules are and what's the situation in your country. In my country, local services pay every tax when you withdraw money, you don't have to pay them if you are a regular citizen. Here you can also avoid taxes if you get income online and no one will care about that but you can also pay them if you really wish, it depends on you. There are many things where you have to pay tax but people don't pay tax and no one cares about that because it's very common here and socially accepted, even among the police and government. That's why I suggest you do your research locally, and ask those who are in crypto.

[buwaytress]

Which exchange does this? But no, you always have your own tax obligations. I'm thinking here the only tax you could pay is VAT, and that your exchange is local and serving nationals from your country -- then you're paying VAT. Seems the most plausible. But your own income tax, nah you still got to make your own declarations.

Good thing is most exchanges now should have a plugin or API to download your annual txs for tax.

[Sanitough]

Even exchanges operating in the US are not mandated to withhold taxes from traders. So I’m curious where did you get the idea about a possibility that some exchanges are withholding taxes and remitting them on behalf of traders?

If they do withhold taxes, the responsibility would shift to the exchange. This is usually done by tax agencies to improve compliance with tax remittance. However, if exchanges aren’t doing this, it likely means the authorities don’t see any major issues with the current system in place.

[davis196]

If your cryptocurrency exchange deducts taxes whenever you do a withdrawal, does that cover your tax obligation to the government? Or are you still required to file a separate tax return for your crypto income?

It depends on your country's tax laws. Are you using a foreign crypto exchange and does your country have an agreement with the country where the crypto exchange is located to avoid "double taxation"? Which crypto exchange are you talking about? Is this a secret? I don't remember any crypto exchange deducting taxes from my withdrawals(back in the day, when I was still using centralized exchanges).
The laws regarding income tax in my country are pretty simple and straight forward, but the income tax legislation in other countries is complex and confusing as hell. Maybe you should talk to a tax accountant in your country.

[hero_the_bossman]

the rules in my country state that cryptocurrency is part of personal income, so when someone makes a withdrawal or trades on an exchange, it will be taxed, and then at the end of each year it will be automatically attached to the individual's tax report, it makes it easier for people since they no longer need to report separate taxes on their crypto income. but this rule only applies to exchanges regulated by the government, if you trade on an exchange outside of what the government recommends such as binance, okx, etc., then it does not apply, and you will be tax-free on those trades.

Wonderful that in some places, it's a bit easier than in others.
And that it doesn't apply going into OKX and etc - because that would be an overkill, in my opinion.

[Free Market Capitalist]

You posted that the tax was deducted by the exchange automatically, then no need to pay any tax after the capital gain tax or the tax that your country is deducting.

AFAIK you don't have to pay anything,

But for most cases if your exchange charges you for taxation fees based on government policies then there is no need to go out of your way paying extra tax.

Yes it covers the government tax and there should be no new separate charges for the transaction.

If what you've said is true, you don't have to pay any taxes or declare anything else, as they've already been deducted. Keep the topic updated, several other users have already asked for the name of the exchange and your country of residence but the OP hasn't replied back.

Why do you speak so categorically about what you have no idea about? OP you listen to them if you want to find yourself in trouble with the tax authorities in your country. As many others have said well, it depends on the laws of your country but in general you can not trust what you deduct the exchange because maybe there are three bands, 15%, 20% and 25% and the exchange deducts the minimum because they do not know if you have accounts in other exchanges and what is the total. Or maybe it is taxed as earned income and then they apply a fixed percentage but what you have to pay will depend on other income and deductions.

[Charles-Tim]

Why do you speak so categorically about what you have no idea about?

If you go to the Nigerian local board, you will know how I have the knowledge about the crypto taxes in Nigeria. Both the 10% capital gain tax, including the VAT that exchanges like Kucoin is charging their customers. In fact, I am no longer using Kucoin anymore when they started the VAT as Nigeria government does not understand what they are doing. I think the VAT is the reason Davidvictorson started this topic because he is a Nigerian. Who will pay their 10% capital gain tax when there banks are not to allow crypto P2P transactions? Also they told the Fintechs like Opay, Palmpay, Kuda and Moniepoint not to register new customers all because they were fed with false information that crypto traders are using them but crypto traders can use even the commercial banks without any problem makes it not true. Such taxes are not taken seriously by Nigerins for now. I will delete my first post if it is too biased from me but know that the OP is a Nigerian.