TL; DR Breakdown
- Crypto exchanges in the UK will pay digital services tax
- Exchanges will pay 2% of their revenue
- The United Kingdom continues to regulate its crypto space
Crypto traders across the world are now being targeted in several regulations, including that of paying taxes. While most countries are still opposed to them, others embrace and try to make revenue from their activities. With this, there has been an update in the UK regarding payments of tax levied on crypto exchanges. According to a Her Royal Majesty Revenue and Commission update, exchanges across the country will be added to a list of companies that pays the digital services tax.
Exchanges will pay 2% of their revenue
In a report released by Telegraph, the digital services tax will ensure that exchanges across the UK pay 2% of their revenue in tax. The tax was levied on the exchange on the back of the United Kingdom’s announcement that digital assets cannot be classified as financial instruments. With the update, crypto exchanges are mandated to pay the digital assets tax.
On November 28, the HRMC announced that it had included crypto exchanges in a list of organizations that will pay the Treasury tech tax. The UK floated this idea to regulate big wigs like a social media company, Facebook, and search engine website, Google. In a statement by the regulator, the addition of crypto exchanges to the list was brought about the cryptocurrencies on the exchanges.With this, crypto exchanges must conform to the regulation and pay the digital services tax
The United Kingdom continues to regulate its crypto space
HRMC, in its statement, pointed out the several digital assets in the space that serve different uses. Since digital assets cannot satisfy the conditions for being called commodity or financial instruments, crypto exchanges cannot be exempted from paying the digital services tax. Giving a report review, CryptoUK, representative of the crypto sector, frowned at including crypto exchanges in the digital services tax. The body said the decree would need to slightly change to see traders and investors take up the tax burden instead of exchanges.
Ian Taylor, the body’s executive director, claimed that the crypto sector is treated unfairly because most regulators continue to see it as different from other financial instruments like stocks. He pointed out that it is another big blow to the industry that has been targeted in a series of regulatory oversight. Notably, the UK’s Financial Conduct Authority recently announced a licensing system that crypto exchanges will begin to go through in the country.
Since the start of the year, the FCA has subjected all the crypto exchanges in the country to Anti Money Laundering checks, amongst other regulations. All this came after the body announced a ban on crypto derivatives across the country. In July, the FCA released a list containing over 100 crypto exchanges, warning traders against them because they were not duly registered in the country. In April, HRMC was working on a regulation that would hold crypto traders trying to evade tax. The body previously asked all crypto exchanges to submit a transaction and holding details of customers since August 19.