Britain’s cryptocurrency exchanges will be subject to a 2% tax, which would almost certainly be passed on to investors, CryptoUK said.
Her Majesty’s Revenue and Customs (HMRC) recently updated its legislation to include a digital services tax on bitcoin exchanges operating in the United Kingdom.
According to a report, cryptocurrency exchanges in the United Kingdom will now be subject to a 2% digital services tax. Because the UK’s tax authority, HMRC, does not classify digital assets as financial instruments, exchanges do not qualify for financial exemptions.
On Nov. 28, the authority expanded the scope of the Treasury’s technology tax to encompass bitcoin exchanges. The revenue-based digital services tax was implemented in April 2020 and is targeted at social media and search giants such as Facebook and Google.
The newest setback for cryptocurrency exchanges comes as a consequence of the HMRC’s categorisation of crypto assets, as outlined by the regulator:
“There are several crypto assets, each with its own unique set of attributes. It said that since cryptocurrencies do not represent commodities, financial contracts, or money, crypto-asset exchanges are unlikely to qualify for the exemption for online financial markets.”
According to CryptoUK, the trade association for the digital asset industry in the United Kingdom, the levy is unjust and will almost certainly be passed on to investors and dealers.
According to Executive Director Ian Taylor, treating cryptocurrencies differently than traditional financial products such as equities or commodities is damaging to the cryptocurrency industry.
He said that this is another setback for the business after the Financial Conduct Authority’s (FCA) rigorous licencing procedure for exchanges. Since January, all UK-based crypto-asset firms have been required to adhere to AML (anti-money laundering) legislation and register with the Financial Conduct Authority (FCA).
In January, the regulator banned crypto derivatives, and in June, the FCA issued a warning to consumers about 111 crypto companies that had not yet registered with the regulator.
Cointelegraph revealed in April that HMRC was stepping up its attempts to catch cryptocurrency tax evaders and requiring clear disclosure of digital asset ownership on self-assessment forms.
In August 2019, the British tax authorities allegedly asked that many crypto asset exchanges provide over information about their clients’ activities and holdings.
Wallets