Global Experiences in Crypto Asset Taxation Policies and Insights for China

Introduction

According to the OECD definition, cryptocurrencies belong to a category of crypto assets. In recent years, with the rapid development of blockchain technology, multiple forms of crypto assets have emerged and quickly become a significant force in fintech, drawing high attention from governments and international organizations. Crypto assets can be categorized into fungible tokens (FT) and non-fungible tokens (NFT), characterized by decentralization, immutability, and anonymity. While blockchain-based crypto assets gain recognition and application in many countries due to their unique advantages, their anonymous and decentralized nature also facilitates gray-area financial activities, such as money laundering and terrorist financing. Therefore, strengthening regulatory measures and implementing taxation policies for crypto assets have become common practices worldwide.

Taxation Policies for Crypto Assets in Developed Countries and International Organizations

Given the rapid growth of crypto assets, many nations and international organizations recognize the importance of integrating them into taxation systems to protect tax bases, ensure fairness, and enhance oversight.

United States: Continuously Improving Taxation Policies and Strengthening Oversight

1. Defining Crypto Assets and Taxation Policies:
   The U.S. has been an early mover in crypto regulation. In 2013, it issued guidelines recognizing cryptocurrencies. By 2014, the IRS classified cryptocurrencies as financial assets (not currency) and mandated capital gains reporting. Subsequent updates refined taxation rules, including provisions for mining income, gifts, and transfers.

   • 2020 Infrastructure Bill: Introduced stringent reporting requirements for transactions exceeding $10,000 and expanded broker obligations.
   • IRS Enforcement: Crypto transactions are now explicitly included in IRS Form 1040, ensuring compliance.

2. Regulatory Measures:

   • Platforms must follow KYC/AML protocols.
   • Information-sharing mandates between exchanges and tax authorities.

United Kingdom: Enhancing Tax System Competitiveness

• 2014: Crypto classified as investment assets subject to capital gains tax.
• 2018: Clarified mining income taxation and exchange rules.
• 2022: Announced plans to regulate stablecoins and foster crypto innovation, aiming to position the UK as a global crypto hub.

France: Reducing Tax Rates to Encourage Growth

• 2014: Crypto profits taxed as commercial income.
• 2018: Defined as movable property, subject to income and capital gains taxes.
• 2019: Licensing framework for issuers and exchanges; transaction fees taxed.

Germany: Dual Nature of Crypto (Currency + Property)

• 2013: Early recognition of Bitcoin’s legality.
• Policy: Tax exemption for personal investments; business use taxed.

Japan: Progressive Taxation Framework

• 2016: Recognized crypto as taxable property.
• 2017: Amended laws to legitimize Bitcoin payments and exempt consumption tax on crypto transactions.

International Coordination Efforts

1. European Union:

   • VAT rules for crypto transactions, with exemptions for exchanges and mining.
   • Proposed 30% flat tax on crypto gains.
   • 2021 Directive: Enhanced cross-border tax data sharing.
2. OECD’s CARF Initiative (2022):
   Standardized global reporting for crypto transactions to improve tax transparency.

Key International Takeaways

1. Legal Classification: Most countries treat crypto as property or financial assets.
2. Transaction-Based Taxation: Rules vary by stage (acquisition, holding, sale).
3. Regulatory Tracking: KYC/AML enforcement and mandatory reporting.
4. Global Cooperation: Initiatives like CARF promote cross-border tax compliance.

Recommendations for China

1. Property Classification: Integrate crypto into tax systems cautiously, with thresholds for small transactions.

2. Phased Taxation:

   • Tax mining income and sales (income/VAT).
   • Defer taxes on holdings until property tax frameworks mature.
3. Oversight Mechanisms: Mandate exchange reporting and adopt KYC/AML protocols.
4. International Collaboration: Engage in OECD/CRS efforts to combat tax evasion.

FAQs

Q1: How does the U.S. tax crypto mining?
A1: Mining rewards are taxed as income at fair market value upon receipt.

Q2: What’s the EU’s stance on NFT taxation?
A2: NFTs are subject to VAT; a 30% flat tax on gains is proposed.

Q3: Why is global coordination critical?
A3: Crypto’s borderless nature requires shared reporting standards to prevent tax evasion.

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