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Tax Expert Says Crypto Buying Is Not A Taxable Event

While many people refer to crypto as the “Wild West,” some believe that this may only continue for a short while.

Thomas Shea, crypto tax lead at EY Financial Services, told Cointelegraph that crypto taxation is a growing area and new regulations could be in place soon. “There are new laws that will require reporting for at least some crypto transactions, and when those rules come into effect, there will be significant changes,” Shea said.

The EY CEO noted that with the growing popularity of cryptocurrencies, lawmakers are constantly exploring how to generate revenue by taxing and regulating digital assets.

“We are seeing certain jurisdictions develop unique modes, rates, and reports for digital assets. In the US, we are seeing digital assets subject to rules and reporting that are typically limited to securities (but not assets). ”

While not many people may appreciate taxing their crypto assets, understanding the changing tax implications associated with cryptocurrencies is important according to Shea. The tax expert notes that market participants need to be aware of “the extent of their transactions potentially triggering a taxable event and related reporting requirements.”

According to Shea, buying or selling a cryptocurrency affects whether it is taxable or not. Buying crypto with fiat and any undetermined valuations are not taxable events. However, the tax administration notes that the sale of your cryptocurrency is a taxable event. He explains that “profit or loss is generally natural capital” and this is taxable.

Even if owners exchange their cryptocurrencies for other assets like Bitcoin (BTC) or Ethereum (ETH), the EY executive noted that this gives users a “taxable event and is required to report profit or loss on the processed cryptocurrency.”

The same applies to non-edible tokens (NFTs). “If you bought the NFT with fiat, there is no tax,” Shea said. However, buying NFTs with crypto is treated very similarly to a crypto exchange. “Total proceeds minus your tax base in the property, usually including any associated fees/expenses,” said the crypto tax expert.

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The EY CEO also urged people to seek the advice of the right advisors as they become aware of their tax obligations.

“In an industry where technology serves as the architectural framework, having a mentor with a technology solution to go with, and a clear understanding of your goals, will allow you to make the best decisions possible. to reduce their tax burden.”

Related: How are crypto taxes reported?

Meanwhile, in Thailand, crypto traders are said to be 7% VAT exemption on authorization exchange. Local traders will also be able to cover losses with annual gains.

Back in February, the Indian government proposed a 30% income tax on revenue from cryptocurrencies. However, many people oppose the proposal as the 30% crypto tax is almost twice as much as the corporate tax rate at 16%.