UK digital services tax targets crypto exchanges – .

UK digital services tax targets crypto exchanges – .

A recent update to Her Majesty’s Revenue and Customs (HMRC) regulations introduced a digital services tax that will be levied on cryptocurrency exchanges operating in the UK.
Crypto exchanges in the UK will now have to pay a 2% digital services tax according to a report from the Telegraph. The UK tax authority, HMRC, does not recognize digital assets as financial instruments and therefore stock exchanges are not eligible for financial exemptions.

On November 28, the authority included cryptocurrency exchanges as part of the Treasury’s technology tax. The digital services tax on revenues was introduced in April 2020 targeting social media and search giants such as Facebook and Google.

The latest blow to crypto exchanges is the result of HMRC’s classification of crypto assets, as the regulator explained:

“There is a wide variety of crypto assets, each with different characteristics. He 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 body representing the digital asset industry in Britain, the tax is unfair and is likely to be passed on to investors and traders.

Executive Director Ian Taylor has said that treating cryptocurrencies differently from other financial instruments such as stocks or commodities is detrimental to the crypto industry.

He added that this was another blow to the industry following the arduous licensing system introduced by the Financial Conduct Authority (FCA) for exchanges. As of January, all UK-based crypto-asset companies must comply with AML (anti-money laundering) regulations and register with the FCA.

The regulator imposed a ban on crypto derivatives in January, and in June, the FCA warned consumers about 111 crypto companies that had not yet registered with it.

A report: UK tax administration to target cryptocurrency tax evaders

In April, Cointelegraph reported that HMRC was stepping up efforts to trap crypto tax evaders and introduced explicit requirements on digital holdings details on self-assessment forms.

UK tax authorities have reportedly demanded that several crypto asset exchanges report client details of transactions and holdings in August 2019.


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