Cryptocurrency traders in Poland launched a petition to protest the government’s decision to tax all cryptocurrency transactions, even those that aren’t profitable.
“We are demanding the release of the blockchain technology market and the abolition of all taxes related to this industry,” according to the Change.org petition, which has already been signed by more than 2,700 people.
In the petition, Polish crypto traders say the new regulations mean that the money they had invested in bitcoin and other virtual currencies will effectively be taxed “hundreds or even a thousand times.”
The brouhaha erupted after Poland’s Finance Ministry published an interpretation of the country’s tax code last week. The Finance Ministry said all income from crypto transactions are subject to either an 18 percent or a 32 percent tax rate.
But what really rankled the crypto community was the government’s insistence that merely selling or buying virtual currencies is a “transfer of property” that is automatically subject to a 1 percent tax.
So in other words, you owe taxes on a crypto trade even when you lose money.
Poland’s growing cryptocurrency community say the government’s newly-imposed tax burdens will squelch the nascent market.
“The Government of the Republic of Poland restricted access of Poles to the constantly growing market of cryptocurrencies through tax regulations that were not consulted with any of the parties,” the Change.org petition reads. “As a result of these regulations, many people lost, or in the near future, [will] lose their capital, which was taxed a hundred or even a thousand times.”
Polish prime minister Mateusz Morawiecki has tried to deter Poles from participating in the mushrooming crypto market by slamming bitcoin and other virtual currencies as “Ponzi schemes.”
However, the government concedes that blockchain — the technology undergirding bitcoin — can be a useful innovation with the potential for broad applications in the banking industry.
There’s a growing movement in other large cryptocurrency markets to tax bitcoin transactions. In the United States, the IRS issued a note reminding Americans that their capital gains on crypto transactions will be subject to taxation.
And in South Korea, the government plans to unveil a cryptocurrency taxation framework by June 2018.
Meanwhile, Fundstrat co-founder Tom Lee predicts bitcoin prices will rise after Tax Day passes in the United States later this month.
Lee attributed bitcoin’s recent price slump to investors selling off their crypto holdings in order to avoid capital-gains taxes. He estimates that U.S. bitcoin investors owe $25 billion in capital-gains taxes for 2017, thanks to bitcoin’s skyrocketing prices last year.
“The $25 billion would represent 20% of capital gain tax receipts (payments) to Treasury, which explains why the IRS cares so much about collecting crypto taxes,” Lee said. “Total receipts for capital gains should hit a record $168 billion (for income tax year 2017), exceeding the $137 billion of receipts in 2007.”
Featured image from Shutterstock.
Last modified: May 20, 2020 8:53 PM