A digital currency tax firm, Divly, recently conducted a study revealing that nearly all digital asset investors did not pay taxes on their crypto holdings in 2022. A staggering 98% of crypto investors did not report their digital asset transactions to the tax authorities, evading their tax obligations.
The findings were discouraging, noting that only a tiny fraction of investors reported their crypto earnings to the tax authorities.
Percentage Of Crypto Investors That Declared Taxes
According to the report, it combined search volume data and certain governmental figures to get an estimate of investors who declared their digital asset dealings to their local authorities.
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The firm noted that only 0.53% of all digital asset holders it surveyed revealed their digital currency dealings to the tax authorities. Notably, Finland made the highest declaration of its crypto activities, recording up to 4.09% of crypto taxes last year.
Australia emerged second, with about 3.65% of investors’ profits in the same year. On the other hand, America managed to hit just 1.62% of its crypto tax payments last year. The lowest on the list is the Philippines, with a digital asset tax payments rate amounting to only 0.03% throughout 2022.
Notably, the entire Asian continent yielded 0.20% of the crypto tax payment rate in 2022. The data also revealed that the tax payment compliance rate in the US had doubled over the last 5 years. It added that out of the 24 countries assessed, the United States managed to emerge 10th, according to the digital asset tax payment rate.
Despite the low rate of the United States, the report remarked that it has many digital currency taxpayers. This is possibly a result of the control of the Internal Revenue Service (IRS) on the nation.
Emergence Of Crypto Gain Taxes And Its Implications
The whole idea of digital currency gain taxes started way back in 2014. The IRS issued “Notice 2014-21” directing that crypto will be treated as property and not currency for the United States federal income tax purposes.
Since then, many countries have followed suit placing tax requirements on crypto investors. While some countries have stringent approaches, others follow a more relaxed measure.
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A recent report revealed that some digital-friendly countries include UAE, Belarus, El Salvador, Switzerland, Malaysia, Singapore, Germany, Malta, and Panama. The best place for digital currency investors is UAE, which collects zero income and capital gains tax.
However, the toughest country is Belgium which demands a 50% professional income tax on digital asset trades and a 33% tax on digital asset profits.
Featured image from Pexels and chart from Tradignview.com
Source: https://bitcoinist.com/crypto-investors-evaded-taxes-in-2022/