IMF Plans To Tax Crypto Assets
Billions in unpaid crypto taxes are yet to be collected, says IMF, pointing to the need for updated tax strategies.
The International Monetary Fund (IMF) says that there are billions of dollars in unpaid crypto taxes. It says that governments have not yet figured out the best way to collect these taxes. The IMF has written a report about the problems with taxing cryptocurrencies. The tax system is not designed to deal with these new types of assets, which have been created by blockchain technology.
In their report, the IMF said that it is difficult to tax cryptocurrencies due to their semi-anonymous nature. They also highlighted the issue of cryptocurrencies being both an investment and a way to pay for things. The high changes in their value also make it hard to tax them. They said that there is no agreement on how to tax them – as gambling, capital gains, or income. They did, however, suggest that taxing the environmentally damaging process of mining cryptocurrencies could be one solution. The potential for lost tax revenue from cryptocurrencies globally could be in the tens of billions of dollars.
The IMF highlighted that cryptocurrencies are very popular in growing economies where it can be difficult to collect taxes. They also mentioned that the way cryptocurrencies are held – some people own a lot, and some people own a little – makes it hard to tax. Different types of holders require different tax strategies. The IMF also mentioned the problem of transactions that can't be traced.
According to the IMF, blockchain technology, which is the basis for cryptocurrencies, could help with tax collection. Blockchain's transparency could make it possible to see transaction history, which could help in collecting taxes. They suggested that smart contracts, which are programs that run on the blockchain, might help to enforce tax laws.
