Different countries have different approaches to crypto taxation. The crypto tax regime of India is quite stringent when compared to others.
The new crypto tax regime of India has caused panic in the hearts of the whole community.
The new laws will be quite stringent and act as a deterrent against crypto proliferation.
On the other hand, many advanced economies are trying to open up to crypto.
Let’s compare India’s crypto tax laws with other countries with insights from Varun Sethi, a lawyer with expertise in crypto and blockchain.
India
India’s crypto tax is one of the most straightforward.
The country levies a flat 30% tax on all crypto gains. Further one cannot set off losses from other income streams or investments in other crypto assets. For instance, losses in Ethereum investment cannot be set off against profits in Bitcoin investment.
On every sale transaction, 1% TDS will also be charged.
Moreover, one cannot deduct infrastructure expenditure in mining.
Gift of Virtual Asset is also proposed to be taxed at the receiver’s end.
Japan
Japan also has a stringent tax regime on crypto.
It levies a 35% tax on a token issuer as token listing is a taxable event.
Airdrops are taxable at both ends of sender and receiver.
Japan too does not allow losses to be carried forward.
Other than that, the standard rates of corporate tax are 15% for gains of and over JPY 4 million and 23.2% for gains over JPY 8 million.
South Korea
South Korea has opted for capital gains tax regime which has not been implemented yet. Rather, it has been delayed till January 2023.
The regime will levy 20% capital gains only above annual gains of KRW 2.5 million.
In South Korea, inheritance or gifts of crypto will be taxed from 2022. The Government here is taking a slow and steady approach to embracing crypto. That’s why it even delayed the enactment of the tax regime.
Singapore
Singapore is the laboratory of fintech in Asia. It has a fair but strict regime, especially for small token issuers.
The country does not charge any capital gains on crypto trading. Moreover, there is no GST on crypto.
Crypto exchanges can get licensed in Singapore, but the process is quite strict.
Recently, NFT trading also became a taxable event. Tax regulations will apply to people who generate income from NFT trading, but not to those who earn capital gains from NFTs.
The corporate tax slabs for startups range from 4.25% to 17%. They also have many startup tax sops.
The standard rate of corporate tax is 21% in Singapore.
Portugal
The Mediterranean country is positioning itself as a crypto hub of Europe.
In Portugal, crypto is taxable only if income is generated through professional trading. Professional trading activity results in business profit.
In any other case, crypto is not taxable as it is not covered in any existing tax category.
Different countries are taking a different approach towards crypto tax, depending upon their economic goals. Surprisingly, most countries around the globe have not banned crypto but are taking a cautious approach towards it.
India has taken a harsh stance on crypto to check its adoption. It has not banned it but the strict and high taxes make the investment unviable for DeFi (Decentralized Finance) users and professional traders.
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