Cryptocurrency and Taxation – Here’s What You Need to Know
Crypto investors aren’t exempt from taxation: The U.S. tax authority has already provided a guideline for cryptocurrency taxation; they believe cryptocurrency transactions are taxable and these currencies should be treated as an intangible asset. When anyone buys crypto coins and sells them in a market, the investor is liable to pay capital gain tax if he realized any gain.
“Some people with bitcoin may think of it as dollars or cash,” says Morin. “But for IRS purposes it should be treated as a house, stocks, bonds. You have to look at the general tax principles that apply to property and how it impacts your gains or losses.”
Also, the Internal Revenue Service plans to expand their cryptocurrency taxation range in the days to come; IRS looks to enforce capital gains tax on all those products that are bought using cryptocurrencies. IRS also plans to collect tax from cryptocurrency owners when they convert virtual currencies into fiat currencies or when investors use one digital currency to buy other virtual currency.
The massive increase in cryptocurrency transactions forced tax authorities to expand their tax range to crypto markets. South Korea, which is among the largest cryptocurrency markets, announced it will present a complete cryptocurrency taxation plan in the middle of this year, while the government is looking to collect taxes from the start of the next year.
The South Korean Ministry of Strategy and Finance plan to impose capital gains tax and other income taxes on cryptocurrency investors. The South Korean official said, “We do not have a specific time frame, but we are thinking about announcing a virtual money tax in the first half of the year.”
Thailand, however, plans to collects 7% value-added tax on all trades along with 15% of capital gain tax. The move of tax collection on cryptocurrency trades signifies that global regulators are legalizing crypto markets – which would help in enhancing trader’s confidence.
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