Recently, Georgia has joined the short list of the nations that don’t ask crypto holders to pay value-added tax (VAT), which essentially earns Bitcoin-like digital currencies the status of real foreign currency.
Apart from Georgia, the governments of several other countries, such as Singapore, have also begun the process of approving proposals that set to exempt cryptocurrencies from VAT. However, comprehensive tax policy and regulations are still not implemented by any government of any nation regarding taxes on cryptocurrencies.
According to an order signed by Georgia’s Finance Minister Ivane Matchavariani, no individuals or companies associated with trading cryptocurrencies will have to pay VAT to the Georgian government. The order is aiming to clarify certain aspects of cryptocurrency taxation for crypto miners, traders, and investors and it will be effective by the end of June.
Citizens of the Republic of Georgia who trade cryptocurrencies for any local or foreign fiat currency will therefore not be required to pay the value-added tax. In addition to that, any citizen of the country dealing with crypto transactions will not have to pay income tax either. When it comes to cryptocurrency miners, companies will have to pay VAT unless they are not registered in Georgia. Georgia has also made significant process in offering cheap electrical energy generated by its many hydro-power plants, which just might turn it to one of the favorite countries for crypto miners.
Lawmakers All Over the World Try to Figure a Clear Crypto Tax Policy
Not only Georgia lawmakers are trying to determine a clear crypto taxation policy, but members of the EU have also been trying to regulate and figure out taxation on cryptocurrencies.
Bitcoin is treated differently in different EU countries. In Germany, for instance buying cryptocurrencies is considered an investment; however the capital gain tax will only be imposed if the crypto holdings are sold in less than a year time since the initial investment. In Switzerland, on the other hand, crypto investors and traders will have to pay incomes and capital gain tax on their crypto holdings. UK treats Bitcoin-like cryptocurrency as foreign currency. Countries such as Estonia impose an only capital gain tax on crypto trading while Slovenia has exempted Bitcoin from capital gain tax.
Countries across the globe have started accepting cryptocurrencies and putting them in mainstream uses as the number of crypto traders and investors are keep growing. However, how these digital assets are going to be taxed is still vague. Cryptocurrency taxation has become one of the main concerns among the growing number of users, traders, and investors.
The VAT tax is among the many taxes that creates an extreme level of confusion among the traders and investors when filing for returns. VAT or value-added tax is one the taxes that most countries impose on the trade of services and goods. A number of countries, including members of the EU, have exempted cryptocurrencies from various types of taxes to boost their mainstream application.
