China’s tax official newspaper called for a crypto tax, indirectly recognizing their legalization?
Since the launch of Bitcoin in 2009, crypto-related economic activity and investment behavior have rapidly swept the world. From a regional perspective, China is a country that actively invests in crypto; due to the limitations of traditional monitoring methods, the risk of tax loss caused by cryptocurrency is worthy of in-depth study and discussion. At the moment, China’s tax official newspaper called for a crypto tax and said that the exchange’s taxation scale was massive.
Calling for crypto tax is indirectly acknowledging its legitimacy
As early as September 4, 2017, the Central Bank and seven other ministries and commissions jointly issued the “Notice on the Prevention of Funding Risks of Token Issues,” which explicitly prohibits the Trading platform from conducting cryptocurrency exchange and trading in China.
After the ban was issued, some domestic trading platforms chose to move abroad to provide domestic users with relevant services in overseas institutions and gradually formed an exchange industry led by Binance, Huobi, and Ouyi.
With the popularity of the crypto market in recent years, the trading volume of related platforms has increased rapidly. As AZCoin News reported, on September 24, 2021, the Central Bank and ten other ministries and committees re-issued the “Notice on the continued prevention and treatment of risks posed by crypto-trading hype.” They stipulate that providing services by overseas exchanges to Chinese Residents through the Internet is also illegal financial activity.
According to the principle that the law is not retroactive, the services that the overseas exchanges previously provided to the people of our country can be considered as law without express prohibition, but they have to pay a valuable income increase following China’s tax law their income from Chinese territory. Tax, corporate income tax, stamp duty, and related taxes. According to the trading volume and past earnings of different exchanges, the overall taxing size of the exchange industry is quite significant, and the taxation of other related industries needs to be clarified.
But since the PBoC defines all crypto activities as illegal, taxation seems to recognize their legalization indirectly.
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