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    CRYPTOCURRENCIES AND THEIR EFFECT ON TAX COMMITMENTS

    The introduction of cryptocurrencies in people’s economic and financial operations and their excessive increase in their use and commercialization has set off alarm bells for tax agents. If you are interested in Bitcoin trading, learn how to obtain the best option for investing in cryptocurrency

    It is necessary to create an equitable approach in terms of the tax contribution by cryptocurrencies, where their collection represents one more income for the stability of world economies.

    A digital environment that calls for legalization

    The challenges the digital market generates for companies and individuals are dominated by excessive use in daily activities, where commercial operations and market capitalization of crypto assets are increasingly common.

    When the taxpayer, due to not having a legal basis, takes advantage of the diversion of capital to avoid declaring that income from cryptocurrency negotiations, the main affected party is the National Treasury of each country.

    Several countries are currently studying and evaluating various ways cryptocurrency transactions can be taxed to control crypto transactions, at least from a tax perspective.

    The lack of a legal framework to regulate cryptocurrencies makes them complex and challenging to control in a traditional legal environment.

    Cryptocurrencies, being digital financial instruments, require that their exchange have up-to-date technological equipment and sufficient capacity to store the data of each operation carried out, in addition to adapting the administrative and billing systems not only to traditional currency but also to cryptocurrencies.

    On the other hand, there is the academic and digital preparation of the professionals who will be in charge of monitoring and achieving compliance with tax obligations by taxpayers, but this time in digital currencies.

    Simple, transparent, adaptable, and applicable tax legislation is intended from the point of view that the tax and administrative burden is reasonable and much less costly for the parties involved.

    What taxes are cryptocurrencies subject to?

    These digital assets represent a monetary value, so they are counted in the owner’s equity, which makes him responsible for declaring his possession.

    Once the possession of the crypto assets has been declared, it must be compared with the values that are estimated to be taxable and proceed to the corresponding declarations; Some of the taxes include:

    • The Wealth Tax refers strictly to having cryptocurrencies, which are part of the taxpayer’s enrichment.
    • Personal income tax focuses on the profits obtained during a fiscal year through cryptocurrencies.
    • The Inheritance and Gift Tax refers strictly to legacies or donations received in cryptocurrencies.
    • All these taxes are subject to the annual fiscal calendar presented by the tax regulatory entities of each country.

    Tax challenges of cryptocurrencies

    Mainly, cryptocurrencies must have legal support to be taxable; However, their use and management have increased; if they do not have the necessary legal basis, it will be difficult to control them, in addition to giving them the tax treatment that corresponds to them due to their complex and changing nature.

    Create regulations that also protect consumers or users dedicated to advertising crypto assets.

    On the other hand, there is the creation of a scale of values that allows uniform taxes on cryptocurrencies, which considers their volatility and the adequate documentation that supports them as financial assets.

    Advances in Blockchain technology can lead to modifications from time to time to the legal bases, which represents a constant update on the matter.

    Added to all these challenges is the constant warning that using crypto assets lends itself to illegal activities such as money laundering, fraud, or tax evasion, to name a few cases.

    Conclusion

    In the ongoing search for the legalization of cryptocurrencies as a financial tool, many parameters arise that must be established during a tax regulation of cryptocurrencies for consumers and future taxpayers.

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    Cryptocurrencies generate high income, and it is where government entities want to establish controls and measures that benefit States with this income to execute social improvement plans for their countries.

    However, it is essential to mention that the final tax quota to be paid will depend directly on the patrimonial situation of the taxpayers.

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