Tax regimes for crypto and digital assets would help to legitimise the industry, professionals have claimed.
According to membership body Global Digital Finance, which canvassed opinion among 22 of its professional crypto and digital finance members, there is strong support for introducing a global tax regime for crypto.
Eleven 'agreed' and eight 'strongly agreed' that the introduction of new tax regimes would 'legitimise the industry' globally; indeed, the majority of professionals canvassed said it was 'inevitable' that tax changes were coming.
Lawrence Wintermeyer, executive co-chairman of Global Digital Finance, said: “Changes in the tax treatment of crypto and digital assets are seen as inevitable by tax and legal professionals engaged in the market and will be welcomed by GDF members."
Already in the UK HM Revenue & Customs applies the rules of 'personal investment' to crypto assets, meaning the holder is liable to pay capital gains tax when they dispose of their crypto assets.
Cryptoassets are also considered as 'property' for the purposes of inheritance tax.
According to HMRC's latest Crypto Assets manual, individuals will also be liable to pay income tax and National Insurance contributions on cryptoassets which they receive from:
- Their employer as a form of non-cash payment
- Mining, transaction confirmation or airdrops
There may be cases where the individual is running a business which is carrying on a financial trade in cryptoassets and they will therefore have taxable trading profits. In such cases, income tax rules would take priority over the CGT rules.
Singapore and Switzerland are seen as the countries with the most advanced tax laws on digital assets, according to nine of the 22 surveyed.
The US was selected by seven participants while Japan received four votes and the UK three.
A move to harmonise tax treatment of cryptoassets globally might create a more level playing field for each country, but those working in the industry are also worried that wave after wave of tax changes could damage crypto.
Respondents to GDF's poll believed the main areas tax authorities should focus on should be which exchanges of crypto and digital assets constitute taxable events, and then the classification of crypto and digital assets for tax purposes.
Nine of the 22 surveyed believed changes would hinder the growth of the nascent industry while eight disagreed and five expressed no opinion.
Eleven agreed such assets should be subject to their own distinct tax regime.
Wintermeyer added: “The tax treatment of crypto and digital assets must be consistent and fair if governments are to embrace digital assets and the economic growth opportunities they offer while avoiding the tax arbitrage of the dotcom era."