According to Thomas Shea, an EY crypto tax professional, purchasing crypto with fiat or any “unrealized appreciation” are not taxable activities.
While many people refer to cryptocurrency as the “Wild West,” others feel it will only last a short time.
According to Thomas Shea, crypto tax head at EY Financial Services, taxes for cryptocurrency is a growing sector, and new legislation may be enacted shortly. “There is new law that will mandate reporting for at least certain cryptocurrency transactions, and when those regulations take effect, there will be major changes,” Shea adds.
According to the EY executive, with the rising popularity of cryptocurrency, governments are always looking for new ways to raise income by taxing and regulating digital assets.
“We’re seeing states adopt regimes, rates, and reporting that are specific to digital assets.” In the United States, digital assets are subject to restrictions and reporting that are normally confined to securities (rather than property).”
While many people may not realize the taxes of their crypto assets, Shea believes that knowing the shifting tax implications related with crypto is critical. According to the tax expert, market players must be aware of the “scope of their transactions that may trigger a taxable event and the accompanying reporting obligations.”
According to Shea, whether you acquire or sell cryptocurrency affects whether it’s taxed or not. Purchasing cryptocurrency using fiat currency, as well as any unrealized gains, are not taxable activities. However, the tax expert points out that selling your cryptocurrency is a taxable event. He emphasizes that “the gain or loss is often capital in character” and may be taxed.
Even if a holder swaps their cryptocurrency for other assets such as Bitcoin (BTC) or Ethereum (ETH), the EY executive observes that this creates a “taxable transaction and requires users to declare gain or loss on the disposed cryptocurrency.”
The same is true for nonfungible tokens (NFTs). “There is no taxable event if you buy an NFT using fiat,” Shea explains. Purchasing NFTs with crypto, on the other hand, is handled very similarly to a crypto-for-crypto exchange. According to the crypto tax expert, “the total revenues minus your tax basis in the asset, often including any related fees/costs.”
In addition, once consumers are aware of their tax duties, the EY CEO advises them to seek the advice of qualified professionals.
“In a business where technology serves as the architectural foundation, having an adviser who knows your objectives and has an associated technological solution will help you to make the best choices possible to reduce your tax burden.”
Meanwhile, crypto dealers in Thailand are supposedly excluded from the 7% VAT on regulated exchanges. Domestic traders would also be allowed to balance losses against profits on an annual basis.
The Indian government recommended a 30% income tax on cryptocurrency earnings in February. Many people, however, were opposed to the notion since a 30% crypto tax is about twice the amount of corporate taxation, which is now at 16%.