In the last few years, more and more countries are paying more attention to Cryptocurrency and blockchain companies with regards to tax law enforcement.
France and Spain began looking into individual crypto tax payment and it seems that Bulgaria is looking into crypto companies to ensure tax law compliance.
The Bulgarian National Revenue Agency (NRA) has announced that it is launching inspections into companies that sell Cryptocurrencies to ensure that all tax and social security laws are being followed to the letter.
The reason for this is that they fear that Cryptocurrency is being used as a means to evade tax and hide revenue.
What is Being Done?
The NRA has already stated that it has conducted surveys on companies that engage in the sale of Cryptocurrency such as crypto exchanges and control actions have been assigned to none of them.
After the completion of the survey, the NRA will then determine if users have properly declared their earnings as a result of crypto trading.
According to Bulgarian tax laws, profits form the sale of cryptocurrencies is filed under annual income and is taxed at 10 percent. Companies that deal in the sale of Cryptocurrency are subject to Corporate Income Tax.
A Complicated Time
In the past, when Cryptocurrency first emerged, almost no governments had any protocol for the treatment of Cryptocurrency trading gains.
Traders who wanted to declare tax on their gains had no means to do so and for years, there was confusion about what was to be done.
With time, however, governments began putting laws in place that classified Cryptocurrency gains and specified how taxes were to be paid on them.
Many countries in Europe such as Denmark, Spain and France have created comprehensive tax laws that have brought some clarity on the matter.
In the United States, the Internal Revenue Service has been criticized for not creating a comprehensive enough tax code for cryptocurrencies and many traders and everyday users are still in the dark about how to file their taxes.
The Road Ahead
Creating a comprehensive tax code for crypto helps solve a number of problems.
First, it helps to remove the belief that crypto is a means of tax evasion. These laws also prevent actual tax evasion and generate income for the government.
It also lends the industry some credibility as being subject to the some oversight as traditional financial institutions means the chances of fraud is reduced.