PwC's new Global Crypto Tax Report 2020 shows that tax authorities treat cryptocurrency as a legitimate asset class now. The report documents how governments across the world have begun establishing r
PwC's new Global Crypto Tax Report 2020 shows that tax authorities treat cryptocurrency as a legitimate asset class now. The report documents how governments across the world have begun establishing rules for taxing digital assets.
The pattern started when the US, Sweden and the UK published substantive guidance on cryptocurrency taxation. Other nations took that signal and moved forward with their own frameworks. PwC ranked countries on a Crypto Tax Index that measures whether they've issued guidance across 20 different areas of crypto taxation.
Liechtenstein leads the pack. Malta, Australia, Switzerland and Singapore follow, all ahead of the US, UK, Canada and Japan in terms of comprehensive guidance.
The approach most countries have taken stays conservative. They've stretched existing tax law to cover crypto rather than writing new statutes from scratch. Tax officials have concentrated on three main areas: capital gains when people buy and sell crypto, taxation of mining income, and value-added tax on trading platforms. Fewer jurisdictions have tackled airdrops, hardforks, staking rewards or crypto investment funds at all.
Large blank spots remain on the map. Not a single country has published clear guidance on lending crypto, borrowing crypto or decentralized finance. Non-fungible tokens sit in regulatory limbo. VAT on staking income hasn't been addressed either.
Peter Brewin works as a tax partner at PwC in Hong Kong. He acknowledges the regulatory vacuum: "Tax authorities and policymakers are still learning about how much of the industry works. We expect the rate of change in the tax landscape to be as fast as it is for the crypto industry over the coming years."
Governments across most jurisdictions view cryptocurrencies as property. That creates a tax event every time someone spends crypto to buy something. PwC sees this approach as a drag on adoption. If every transaction triggers a tax calculation, most people won't use crypto to pay for coffee or anything else.
The bottleneck could loosen if software gets better at handling the paperwork. Automated tools that track transactions and calculate tax implications could ease the burden on users. Right now, the compliance work falls on individuals, making crypto impractical as a daily payment method for most people.
