According to Colin Wu, a Chinese reporter and blogger who follows everything related to the blockchain and cryptocurrency sectors, the state of China’s official tax publication, China Taxation News, has called on the authorities to levy tax on digital assets. Although all cryptocurrency operations were ruled unlawful after September, Wu believes that taxing cryptocurrencies will serve as an indirect method of legitimizing the cryptocurrency market.
“The tax official publication in China has advocated for a cryptocurrency tax, claiming that the taxation level on the exchange is extremely huge. However, because the People’s Bank of China considers all crypto-related operations to be unlawful, taxes appear to be a tacit recognition of their legalization.” –Wu Blockchain (@WuBlockchain) will launch on October 20, 2021.
The 2017 China Crypto Crackdown
Anonymous article writer gives a detailed analysis of China’s stance on crypto taxation. The article writer is from the State Tax Administration’s Loudi Taxation Bureau. He or she says that while the crypto industry is still growing and its overall market valuation has reached a mind-boggling $2.6 trillion (with Bitcoin’s market valuation of $1.2 trillion), the risk of losing the opportunity to tax crypto is worth debating thoroughly.
Following the September 2017 prohibition on original coin offerings in China, the authorities will tighten down on digital assets once more in September 2021. This time, the monetary authority (PBOC) proclaimed all cryptocurrency transactions and online cryptocurrency trading services to be unlawful. And a large majority of exchange platforms stopped their operations in the region.
Taxation Of Cryptocurrency Exchanges Is Still A Possibility
Following the issuance of the “prohibition document”, many local cryptocurrency exchanges, such as Huobi, elected to move to other jurisdictions, while others chose to close their doors. Large cryptocurrency trading companies, such as Binance, have ceased serving customers from China, as the offering of cryptocurrency trading activities in China by foreign platforms has also been made unlawful by the Chinese government.
However, per the author of the publication, although it is prohibited according to the wording of the law, it is not physically impossible to possess cryptographic assets in practice. As a result, the writer claims, foreign exchanges may continue to operate in China, but they will be subject to taxation in this situation. However, first and foremost, a legislative basis must be established.
The writer goes on to say that it is undeniable that digital assets (such as Bitcoin, Ethereum, and other cryptocurrencies) will not be extinguished in a short amount of time. As of right now, people in China are permitted to hold cryptocurrency, according to existing Chinese legislation. These activities, which can be classified as “invalid civil acts” as far as the law is concerned, are not expressly prohibited.
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