Over this last year, financial gain in cryptocurrency has phenomenally escalated and to manage this UK authorities are reviewing how digital services tax could apply to them.

Whilst the HM treasury level up the tax amongst the tech giants such as Amazon and Facebook, crypto platforms are not going to escape it either. In a recent article by the telegraph, the HM treasury plans to implement a 2% digital services tax on crypto platforms who make a profit from trading coins. Justifying their decision, they affirmed that these companies are not recognised as financial services which are exempt from this tax. This means that, in terms of some of the biggest crypto platforms such as Coinbase and Binance they could be taxed as they are not classed as “financial instruments”, because they do not trade financial commodities, recognised currencies or financial contracts and so they will have to pay.

To date, tax authorities are unable to identify revenues as increasing amounts of wealth which go’s undetected which is a series problem for governments. Following this, other regions may also adopt this digital services tax method as they also seek to recoup money back into their own financial systems.

Digital services tax on personal assets

This comes at a time, when HMRC have already hinted that other taxes may come into effect for investors who receive profits from trading cryptocurrency. They are likely to be taxed on personal assets and will not be able to avoid paying tax on profits raised from trading crypto. Demanding information on cryptocurrency holdings including coins from across the globe and electronic holding wallets like familiar PayPal could become part of an annual tax return.

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