Governments and Cryptocurrency Taxation: Are They Being Properly Addressed and Analyzed?
There are some countries that want to impose more severe regulations in the cryptocurrency market and for those users that are called ‘tax evaders.’ Nevertheless, this might not be the best way to tax virtual currencies and users in the cryptocurrency market.
In some cases, crypto taxation tends to be very complex. One of the things that are worth mentioning is the fact that virtual currencies have to follow rules that are already being applied to other assets such as stocks. For example, while individual trades in the stock market could be taxed in a very easy way, crypto traders have some issues with this. In a single day, it might be possible for individuals to transact several times a virtual currency due to the low fees that exchanges have.
On December 4, the Japanese government has decided to establish a system that would be tracking down individuals that refuse to pay tax on profits made from virtual currency transactions. The information was released by the Japanese newspaper called The Mainchi.
Although it is clear that the the Japanese government could receive an important amount of funds from virtual currencies during bullish years, it also sends the message to the population that crypto traders are criminals.
However, it is also necessary to see the impact of a more simplistic tax code that would be regulating virtual currencies. At the same time, the cryptocurrency community is also a promoter of libertarian values and how fiat currencies harm populations.
Instead of calling crypto investors cheaters, tax evaders and criminals, the best that can be done is to create a simple and clear taxing system that would allow investors to understand how to be taxed. Asking people that participate in the market to follow each transaction they make in the market is not the best way to regulate the space.
With a clearer tax system, investors would feel more comfortable to trade virtual currencies and also they would be more willing to pay their taxes as well. Without this approach and calling investors fraudsters the government is losing an important amount of funds that users are ready to pay with a clear taxation system.