Taiwan’s government is getting serious about crypto taxes. They’re facing a challenge: lots of people aren’t paying taxes on their cryptocurrency profits.
The Problem: Crypto Tax Evasion
The Ministry of Finance admits they haven’t figured out how to effectively collect taxes on crypto gains. Lawmakers are questioning the current system, pointing out that crypto profits should be taxed like other income. While the government says investors should be paying taxes, it’s proving difficult to actually collect them. The existing system focuses on taxing the 26 licensed crypto exchanges, but tracking individual investor profits is proving tricky. One official even struggled to explain how this is currently being done.
The Plan: A New Tax Framework (Maybe)
The government promises a review of the current tax laws within three months to improve crypto tax collection. They’re also working on a brand new digital asset tax law, but details are scarce. Meanwhile, stricter rules for crypto exchanges are being implemented, requiring better monitoring of transactions and stricter anti-money laundering measures.
The Challenges: Catching the Tax Dodgers
A legal expert highlighted a major hurdle: Taiwan’s tax laws primarily focus on income earned within the country. This makes it hard to tax profits from overseas exchanges, especially if the profits are below the threshold for reporting overseas income ($230,000 for 2024). The government can only monitor bank accounts, making it easy to hide crypto transactions or disguise them as other types of overseas activity. Basically, the current system makes it easy to avoid paying taxes. The expert concludes that significant changes to the law are needed to effectively collect crypto taxes./p>
