Business 17 May 2018Dan Taylor
Azerbaijan becomes latest country to tax cryptocurrency revenues
Azerbaijan has become the latest country to announce measures taxing revenues from cryptocurrency-related operations, joining numerous other jurisdictions in applying a levy to crypto received.
Nijat Imanov, deputy director general of tax policy at the country’s Tax Ministry, told local press that any revenue received in cryptocurrency would be taxable in the usual way, echoing comments made at the Finance and Investment Forum held in Baku earlier this month.
The tax is regarded as an income tax for individuals engaged in cryptocurrency transactions, while legal entities will pay their portion as a profit tax, the Trend News Agency reported. According to Imanov, this will be calculated on any net receivables, after acquisition costs are taken into account.
Trading in cryptocurrencies has become increasingly popular in Azerbaijan in recent months, following an explosion in popularity from May to December 2017. Individuals were able to take exposure to crypto markets from as little as $10, with analysts noting a marked rise in the volumes of traders speculating on the markets during and since this period.
The decision to tax cryptocurrency profits brings the Eurasian state in line with multiple other jurisdictions around the world, in formalising their tax treatment of cryptocurrency receipts. It comes at a time of increasing scrutiny over cryptocurrency markets, both from governments and regulators, in a bid to control the dramatic surge in popularity of crypto investments.
In the United States, cryptocurrency transactions count as taxable income, and must be reported and paid as either income tax, capital gains or taxable wages. Similar rules were introduced in South Africa, where cryptocurrency has been found to be subject to all normal tax rules, including capital gains on disposals.
Israel has also recently come out in support of a similar capital gains treatment for crypto, while authorities in Thailand apply a 7% VAT rate and a further 15% flat rate of capital gains tax for disposals in cryptocurrency there.
Having recently reclassified cryptocurrency transactions, France has slashed the rate of applicable tax from 45% to just 19%, while authorities in South Korea and India have pledged to introduce enforcement of cryptocurrency taxation in the near future.
Note: Tokens on the Bitcoin Core (SegWit) chain are referenced as BTC coins; tokens on the Bitcoin Cash ABC chain are referenced as BCH, BCH-ABC or BAB coins.
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