Despite the slow advancement of digital asset regulations, taxpayers need to start warming up for cryptocurrency taxation. Chile has already planned to tax its citizens on all earnings tied to digital assets. The Internal Revenue Service (Servicio de Impuestos Internos, SII) has already made public a crypto-asset form that will be filled by taxpayers annually.
This move comes barely a year after the Chilean authorities ruled that digital assets will not be subject to the local Value Added Tax (VAT) after classifying them as “non-tangible assets”. However, the ruling appears to have been overtaken and Chileans will have to pay taxes earned on crypto. Chileans will submit their annual returns every April.
Cryptocurrencies are here to stay and Chile is set to tap into the industry potential at the early stage given the complexity of digital money taxation. According to the Diario Bitcoin, a crypto declaration will be classified as “other own income and/or third-party income from companies that declare their effective income.”
According to the SII director, Fernando Barraza, traders are required to register their operations under “tax-exempt invoices” for the ease of monitoring by the agency. The digital money market interest is on the rise in the country and this has prompted the government to capitalize on the boom. The increased adoption is reflected in the fact that Chileans are using crypto as a medium of trade for product and service purchasing.
The move has put the country into confusion and the world is watching since the legality of the virtual currencies is still under discussion. However, the agency maintains that it is a positive move as it seeks to “offers legitimacy to cryptocurrencies.”
According to a local news outfit, CriptoNoticias, citizens and crypto enthusiasts are waiting for the SII to give clear cut guidelines;
”[The SII] has arranged taxation in the broadest possible way, this is apparently due to two objectives: on one hand, to expand the tax structure as much as possible to cover all types of cryptoassets and, on the other hand, due to the current lack in Chilean legislation of figures specifically designed for this type of instruments, which makes it difficult to generate more specific items.”
Crypto exchanges have had a hard time in Chile in the past and the move might see their businesses thrive. Most financial institutions have been opposed to their operations and taxation might open up more opportunities for them before the end of 2019.
With the taxation being backed by the central authority, it is evident that Chile is set to become the next crypto-hub. Already adoption is on the rise in the country with a local exchange, Crypto MKT collaborating with an online payment firm, which will see over 5,000 merchants officially accept crypto.
Interesting times are ahead as more countries are likely to tap into the digital money markets. With the increased crypto use cases and adoption, no central government is ready to let the crypto piece of pie slip through their hands.
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