Crypto Tax Crackdown
In recent weeks a small collection of countries including Australia, Belarus, Germany, Portugal and Singapore have announced transactions made using cryptocurrency will be exempt from VAT, regardless of transaction size.
Never one to miss a trick, the USA has taken a very different approach.
The Internal Revenue Service (IRS) have declared they will be providing more clarity on how cryptocurrencies will be taxed in the US in the coming weeks, but what is clear, is that they will be targeting what they see as crypto tax evasion.
Currently in the US using Bitcoin (or other cryptocurrencies) to pay for goods and services (as well as trading, selling and mining) is currently taxable, however, recent transactional data suggests that people aren’t taking this very seriously with only 53% of American crypto users genuinely reporting their related gains or losses.
To prevent this continuing, the IRS has proposed a number of extreme actions to counteract what they consider as ‘crypto tax evasion’.These range from the fairly obvious methods such as reviewing block explorer data and ongoing transactions, to more unorthodox methods, including grilling friends and family, searching through social media posts, using hi-tech surveillance to determine if a citizen holds a Bitcoin account, as well as subpoenas to access bank, PayPal and crypto accounts to review personal data.
Whilst on the other side of the world, Singapore, often referred to as the ‘City of the Future’, has taken the more Zen approach proposing to exempt cryptocurrency from goods and services tax (VAT). If adopted by Singapore’s Parliament, the proposal will become law in January 2020.