Her Majesty’s Revenue and Customs in England has recently levied a new tax on cryptocurrency exchanges in the UK. After the new tax is put in place, exchanges in the country will have to pay a 2% charge digital services tax. With the revised taxation rates, there are some serious implications impending. The new rule falls under the Treasury’s tech tax. In other past, the digital services tax took under its gambit social media giants like Facebook and Twitter. Now cryptocurrency is in its scope as well, and that would mean new taxation rates will change the way crypto users from the UK invest in digital assets.
The problem with crypto taxation rates is the classification of crypto assets. Cryptocurrency can be classified as commodities, assets, currency, or some other type of asset. Different categories fall under different brackets, and each bracket has a different tax rule. In the past few weeks, crypto came under intense regulation from the United Kingdom Financial Conduct Authority (FCA). Under this new rule, crypto firms will have to adhere to anti-money-laundering requirements of the United Kingdom Financial Conduct Authority.
When the entire world is waking up to revised crypto taxation rules, such a step from the government of the UK is no surprise. Within the last few days, South Korea came up with new crypto tax policies, and other countries like India are on their way with the same. How the revised policies affect cryptocurrency is still under speculation.