It’s an understatement to say that at the moment investing in Bitcoin and other cryptocurrencies is a lucrative business that attracts more and more people. And, of course, given the volumes of trade and the gains made in transactions related to this activity, it has come to be considered taxable.
Therefore, governments have started to build up the legal arsenal to regulate the taxation of cryptocurrencies. Of course, this change of direction did not go unnoticed by investors. However, according to a recent survey conducted by Childly, it would seem that the majority of them are now in favor of it. But what does this really mean in practice?
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66% of respondents in favor of taxing cryptocurrencies
These figures come from a survey conducted by Childly – a South Korean wallet provider – among more than 5,750 cryptocurrency users worldwide. To go into more detail, 48% of them fully approved of the measure, which even described taxes on digital assets as unavoidable. In addition, 18% of the respondents – although in favor of paying taxes – wanted to see lower conditions for an acceptable level of taxation. While government tax authorities may smile at these figures, there are nonetheless some who are opposed to them.
For example, the study suggested that 20% of the users surveyed were not in favor of such taxation, especially in its current form. Nearly half of them think that it is too early to apply it and that it would be better to take time to explain the conditions. As for the other half of the dissidents, the disagreement with taxation is deeper. They are calling for a completely new tax framework and rules, different from what applies to other types of assets. As suggested by Eunti Kim – Executive Director of Childly – their opinion should be taken into account in order to get everyone on board on the issue.
A clear lack of knowledge about crypto-fiscal obligations
This observation was established in a report provided by Blox, the leading platform in the field of cryptocurrency accounting, and Sovos, the leading platform for tax software.
The two organizations have written the 2020 Crypto Tax Report for which they interviewed US accountants who provide accounting and tax services in cryptography. The result is edifying: more than half of the surveyed accountants believe that most of their clients are in debt to the tax authorities.
Paul Banker – General Manager of Tax and Regulatory Reporting at Sovos – made a statement in an attempt to explain these figures. He said that “investors in cryptos still do not know, in an alarming way, how to manage their tax returns and obligations.”
However, according to the accountants interviewed, the lack of understanding of government regulations is not the real cause. For 90% of them, it is rather the lack of accurate and complete transaction data available to clients.
As recommended by Alone Muroch, the CEO of Blox, more automated tools and software should be made available to investors to eliminate the difficulties associated with manual reporting. That will enable them to pay more of the taxes set and thus materialize the high approval rate expressed on the subject.
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First published in thecointribune, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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