Amid the market’s bullish run, Taiwanese financial authorities vowed to review tax regulations to tackle the country’s crypto tax evasion issue. However, local reports noted the regulators might face difficulties implementing an effective digital assets-related tax framework.
Taiwanese Authorities To Review Tax Laws
On Monday, Taiwan’s Ministry of Finance pledged to revisit the tax regulation regarding crypto gains amid the recent market rally. During a legislative hearing, finance Minister Chuang Tsui-yun reportedly admitted that the agency has yet to implement a system that effectively collects digital asset-related taxes from individuals.
Kuomintang lawmaker Lai Shyh-bao questioned the current regulations. Lai argued that cryptocurrencies are classified as digital assets in the country, meaning that investors profiting from their trading should not be exempt from income taxes.
Taiwan’s Director-general of the Taxation Administration, Sung Hsiu-ling, explained that investors must file income taxes accordingly. However, this claim was disputed by Lai, who suggested that Taiwanese investors won’t feel the need to file their crypto tax reports if no authority audits them.
At the hearing, Wu Lien-ying, the director-general of the National Taxation Bureau of Taipei, added that the existing policy collects business and corporate income taxes from 26 crypto exchanges that obtained anti-money laundering licenses from Taiwan’s Financial Supervisory Commission (FSC).
According to Focus Taiwan CNA’s report, Wu “struggled to provide clearer details of how income taxes are collected from investors trading in these platforms.” Wu and Sung also revealed that the FSC is drafting a new digital asset-related tax law but didn’t offer further details.
The FSC has recently updated its regulatory framework to require stricter due diligence from crypto trading platforms. As reported by Bitcoinist, exchanges must closely monitor and review the listing and delisting of cryptocurrencies and establish measures against illicit trading.
A New Crypto Tax Framework Could Face Challenges
Per the report, Chuang and Sung pledged to review the current framework within the next three months to “better enable the government to tax cryptocurrency gains.” However, a legal expert familiar with crypto told Focus Taiwan that the current tax laws might pose challenges for the financial authorities.
Individual income tax is only charged on incomes generated within Taiwan, as it follows the principle of territoriality. This means that if an investor earns income from non-regular trading of digital assets within the country’s territory, the gains will be categorized as “income from property transactions.”
As a result, the territoriality principle might make enforcing strict tax laws on crypto transactions more difficult, as individuals trading on overseas exchanges could evade scrutiny if their gains remain below the threshold for taxable overseas income, which was set at $230,000 for the 2024 fiscal year.
As far as I know, the Finance Ministry can only monitor the currency flow of bank accounts used for transactions, similar to how it monitors stock trades. Taxes can easily be evaded by disguising the transactions as overseas activity conducted in U.S. dollars.
Focus Taiwan’s source ultimately suggested that these regulations must be amended to address the tax evasion issue and effectively collect crypto taxes from Taiwanese investors.
You can get bonuses upto $100 FREE BONUS when you:
💰 Install these recommended apps:
💲 SocialGood - 100% Crypto Back on Everyday Shopping
💲 xPortal - The DeFi For The Next Billion
💲 CryptoTab Browser - Lightweight, fast, and ready to mine!
💰 Register on these recommended exchanges:
🟡 Binance🟡 Bitfinex🟡 Bitmart🟡 Bittrex🟡 Bitget
🟡 CoinEx🟡 Crypto.com🟡 Gate.io🟡 Huobi🟡 Kucoin.
Comments