The UK‘s tax office, Her Majesty’s Revenue and Customs, is requiring local cryptocurrency exchanges to report their operations in order to verify tax compliance.
The HMRC has sent letters, spotted by Coindesk, over the last week to at least three exchanges– Coinbase, eToro, and CEX.IO – to inform the regulator about users’ transactions in order to identify tax evasion. The US-based Coinbase has previously handed over the customer database to the US authorities last year under a federal court order.
While the HMRC has previously published a guide aimed at crypto dealers to help shed light on the taxation process, it refused to share details about its latest efforts “since disclosing them could jeopardize the assessment or collection of tax,” it said.
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Indeed, the HMRC sees digital assets as property rather than as forms of money. As a result, cryptocurrency investors may owe corporation tax, income tax, or capital gains tax depending on their activities and transactions type.
The taxman cometh
Recently, there have been numerous reports emerging of tax authorities clamping down and going after cryptocurrency traders. Most recently, the US Internal Revenue Service (IRS) sent letters to taxpayers who might have failed to report income and pay the resulting tax from cryptocurrency transactions. Warning them of stiff penalties if they fail to report income or pay tax on crypto holdings, the IRS said over 10,000 taxpayers are expected to receive letters by the end of August.
Brazil’s tax authority also prepares to get data from trading intermediaries, such as crypto exchanges. Once the new rules come into force in September 2019, the RFB will be able to solicit information on customers who are suspected of tax evasion.
Brokerage firms or exchanges located in Brazil will be obliged to inform the tax watchdog of all cryptocurrency transactions performed, regardless of their value. As for the exchanges based out abroad, the customers themselves will have to report the transaction themselves, whenever their monthly trading volumes exceeds $8,000.