Crypto Tax: Which countries are the worst?
Crypo tax is becoming a common topic of conversation around the world. There is only a handful of countries that still refuse to introduce a law specifically for the digital currencies.
Although most countries, regardless of how friendly they are towards the blockchain, have introduced a tax on cryptos, there are a few that manage to stand out negatively. This is because people from those countries have to pay absurd amounts of money on their crypto capital gain.
There are three that come to mind immediately. Let’s take a better look at these countries.
Japan – 55% tax on cryptos
Japan has hands down the largest tax on cryptos out there. The reason why the country wanted to restrain these assets so much is due to the mass adoption of blockchain assets in the country. Japanese people have adopted cryptos to a point where pretty much everything can be purchased in the country by using Bitcoin.
Because of such mass adoption, it became very hard to enforce income tax in general. This was because a lot of people started using cryptocurrencies as an alternate payment method.
Multiple organizations in the country have pleaded with the regulator to somehow reduce the tax on cryptos. They want to find alternative methods for regulating the blockchain space. Thankfully, the pleas have been heard and the regulator has announced that a reduction of the tax percentage will in fact happen.
It will most likely be reduced to around 20% on crypto capital gain, but it’s not certain quite yet. The regulator could see 20% as too low and ramp it up to 30% instead. Regardless of the changing tax policy, Japan still managed to score the first position on this naughty-list.
Belgium – 33% crypto tax
The next country on the list is Belgium for its 33% crypto tax which was introduced in March 2018. Note the fact that this is not considering the income tax, this 33% is purely crypto oriented. If we were to consider also the income tax, then countries like Sweden, Norway and Germany would rank highest.
The reason why Belgium introduced crypto tax was to make a move against the mounting money laundering cases in the country. By simply having the tax policy in place, they’d at least know who the crypto holders are in the country. They can then also conduct weekly or monthly checks to see if any shady transactions have occurred.
However, the implementation of these taxes on cryptos has been extremely hard. This is due to most local investors using offshore platforms. Accordingly, gathering information about transactions is next to impossible for the tax authorities.
South Korea – 24% taxes on cryptocurrencies
Although South Korea is by far not the harshest tax man when it comes to cryptocurrencies, the laws governing the crypto sphere in the country earn it a spot in this list regardless.
The nature of crypto regulation in South Korea is quite controversial to many blockchain enthusiasts. For example, every crypto transaction above a certain price range will require the individual to disclose their identity through an ID card.
With this law, a large ledger of crypto holders enforce the South Korean crypto tax. This makes it easier for the local tax agency to check up on the transaction histories, much like in Belgium.
However, things seem to be boiling down to a simmer as the country is considering to open a local crypto hub in Boosan, by allowing them to create their own digital currency.