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Nothing is certain but death and taxes. What about cryptocurrency taxation?

Regulation
Margareth Nail

At the moment, there is no clear understanding what the process of raising money through ICO is all about. Besides very few countries have established legal definition for cryptocurrency. Control over profits from buying tokens, bitcoins and altcoins is complicated by the decentralized nature of this system. That is why at first glance it may seem that it's not necessary to pay taxes. Bitnewstoday.com takes a look at what experts think on this issue.

According to unconfirmed reports from open sources there have been some citizens who tried to consult with tax authorities concerning their incomes earned with ICO. The officers responded that they had no idea whether it is needed to pay taxes since the relevant legislation does not exist. However to avoid problems in the future, they were recommended to pay taxes, declaring them as individual income tax.

"Given the extreme level of opacity in this sphere and the absence of a legislative framework. no matter how much you would like to do it (ed., to pay taxes) it will be difficult. In the vast majority of jurisdictions bitcoin and other cryptocurrencies are not recognized as a full-fledged currency, therefore, the financial result obtained in bitcoins can not be considered real income. At the same time, if you converted a fiat currency into bitcoins, got some profit and then converted the funds back into a fiat currency – this kind of operation can be treated as a receiving income by using two mutually directed trade deals. In this case, you can have a tax obligation, which is extremely difficult to fulfil considering current level of legislative regulation in this sphere," says Grigory Grachev, Financial Analyst at North-Western Managing Company.

Due to the absence of the relevant legislation and a clear position of the tax authorities many cryptoinvestors are thinking about the schemes that would help them to remain "clean" for the state.

"Now there are still some ways to withdraw money by transferring your funds through various exchanges to payment systems based on the territories like Belize and at the end of the chain to withdraw money from the ATM in your country "as a non-resident". It all can be applied only with relatively small amounts, since large transactions in any case are under control and can not bypass the banking system," says one of the specialists at development and innovation department, at FxPro.

The most advanced in the field of cryptoeconomics at the moment are the United States. According to experts, nowadays it is the only country where it is possible to pay taxes for incomes received from ICO and trading with cryptocurrencies. For example, as experts believe, the growth of Ethereum can cost a tax amounting to 25%, as "short-term capital gains".

"Today, taxes are paid only in the US, so most projects do not accept investments from the US citizens. The legislation of Russia and the European Union does not yet require paying taxes from the funds raised, however, Russian teams choose offshore jurisdictions to reduce regulatory risks – Estonia, Singapore, Cyprus," said Ilya Buturlin, Head of Digital Economy Programs, Financial University.

Despite the fact that the situation with taxation is quite uncertain, taxes should be paid. Especially if transactions are made in the developed economies. In case of the problems, the state can claim that even the absence of a relevant taxation is not an excuse for not paying taxes.


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