While many call cryptocurrencies the “Wild West”, some believe that this may continue for a little longer.

Thomas Shea, head of cryptocurrency taxation at EY Financial Services, told Cointelegraph that taxation of cryptocurrencies is under development and new rules may be introduced soon. “There is new legislation requiring the reporting of at least some cryptocurrency transactions, and when these rules come into force, there will be significant changes,” Shi says.

The EY executive notes that with the rise in popularity of cryptocurrencies, lawmakers are constantly exploring how they can generate income through taxation and regulation of digital assets.

“We see some jurisdictions developing unique systems, pricing and reporting for digital assets. In the US, we see that digital assets are regulated and that reporting is generally limited to securities (not real estate).”
While not many people appreciate taxes on their crypto holdings, Shi says it is crucial to understand the changing tax implications associated with cryptocurrencies. The tax expert notes that market participants need to be aware of “the volume of their transactions that could give rise to a taxable event and the reporting requirements associated with it.”

Buying or selling a cryptocurrency affects whether it is taxable, Shi said. The purchase of cryptocurrencies is legal and any unrealized increase in value is not a taxable event. However, the IRS notes that the sale of your crypto agent is a taxable event. He explains that “gain or loss is generally capital in nature” and it can be taxed.

The EY leader notes that even if a holder exchanges a cryptocurrency for other assets such as Bitcoin (BTC) or Ethereum (ETH), this gives users “a taxable event that is required to report gains or losses on a cryptocurrency that has been discontinued.” “.

The same goes for non-fungible tokens (NFTs). “If you buy NFTs with a cash order, it’s a tax-free event,” Shi says. However, buying an NFT using a cryptocurrency is very similar to a cryptocurrency exchange. “Total revenue less your tax base on the asset, usually including any associated fees/expenses,” says the cryptocurrency expert.

The EY chief also encourages people to seek the advice of appropriate advisors when they are aware of their tax obligations.

“In an industry where technology is the architecture, having a consultant who has the right technology solution and understands your goals will enable you to make the best decisions to reduce your tax burden.”
Related Topics: How are Cryptocurrency Taxes Reported?

Meanwhile, in Thailand, cryptocurrency traders are exempt from the 7% value-added tax on licensed exchanges. Domestic merchants will also be able to make up for losses through annual profits.

Last February, the Indian government proposed a 30 percent income tax on cryptocurrency income. However, the proposal was opposed by many, as the 30% cryptocurrency tax is almost double the corporate tax rate of 16%.

Source: CoinTelegraph