The United Kingdom’s tax collection system As part of the digital services tax scheme, Her Majesty’s Revenue and Customs (HMRC) has announced that crypto platforms will be subject to a 2% tax. Pro-cryptocurrency organizations are already lobbying against the legislation.
Her Majesty’s Revenue and Customs (HMRC), a non-ministerial department in charge of tax collection in the United Kingdom, has announced that cryptocurrency exchanges will be subject to a new technology tax. The Telegraph reported on November 28 that cryptocurrency platforms would be subject to a 2% digital services tax, which went into effect last year.
The HMRC also stated unequivocally that crypto assets are not financial instruments. As a result, they would be unable to claim an exemption as a financial marketplace. It stated,
There are many different types of crypto assets, each with its own set of characteristics. It stated that because cryptocurrencies are not commodities, financial contracts, or money, crypto-asset exchanges are unlikely to benefit from the exemption for online financial marketplaces.
There has already been an effort within the country by pro-cryptocurrency groups to call for changes. According to the CryptoUK group, treating cryptocurrencies differently than other assets is unjust.
However, it appears unlikely that UK regulators will change their minds on the matter, as the country appears determined to regulate the market. In recent months, the Financial Conduct Authority (FCA) has taken a number of steps to inform investors and warn market participants about potential violations.
The FCA and the Bank of England announced a collaborative effort to use blockchain technology for regulatory reporting. The FCA Chairman has called for stricter regulation, despite seeing promising applications for the technology.
Crypto taxation is a major topic of debate among governments.
The United Kingdom’s attempt to tax the cryptocurrency market is just one step in a global effort to tax the crypto market. Several countries have stated their intent to tax the market if they have not already done so.
South Korea was one of the first countries to implement a market tax scheme. The hefty 20% tax rate irritated investors, but the country’s authorities appeared steadfast on the issue. However, there appears to be a snag as the opposition party has requested a postponement.
Argentina and Austria have recently enacted crypto tax laws, with varying approaches. Argentina will levy a credit and debt tax on crypto transactions, while Austria will treat crypto assets like stock tokens in a tax scheme that will go into effect next year.