- Leaders keen on developing a cryptocurrency taxation system
- G20 seems to read from the same script with IMF president
- The proposal will be ready for implementation by 2020
Political leaders from G20 nations are calling for international regulation and taxation of cryptocurrencies to fight money laundering. The leaders have signed a document showing their desire to collaborate and look for a solution.
Crypto Market “Great IT Company”
The leaders, according to Japanese publication jiji.com, are keen to develop a crypto taxation system as they consider the cryptocurrency market great “IT Company.” This means the attendant taxation system will enable countries to tax crypto-based cross-border payments.
The leaders of the leading 20 global economies were attending a G20 summit in Buenos Aires, Argentina where the decision was reached to start a taxation system for the cryptocurrency market. The International Monetary Fund (IMF) has for the last several months repeatedly raised the issue of creating global cooperation to help deal with the emerging Fintech space and, it may appear like the global leaders are finally reading from the same script.
Should the proposal see the light of day, it will be a huge step forward since according to the existing laws, governments don’t have any legal backing that allows them to tax foreign companies which don’t have a physical presence locally. According to jiji.com, there is sufficient evidence showing how entities use this gap to circumvent and avoid paying taxes. The leaders’ joint declaration stated:
“We will seek solutions for the international taxation issue accompanying the digitization of the economy and will continue to collaborate.”
The G20 leaders have also pledged to establish a cross-border cryptocurrency tax system that will introduce the right measures that will prevent multinational corporations from succeeding in tax avoidance. They will consider the details of the system that the group will establish during the 2019 G20 chapter that will be held in Osaka, Japan, while they expect the final version of the regulations that will consider individual proposals from all members to be ready by 2020.
AML Framework Also on Cards
The G20 is also intent on developing a framework that will deal with illicit activities like money laundering associated with cryptocurrencies besides establishing the taxation system. The Japanese media outlet noted that the EU and UK were positive about introducing global tax rules but the US and China were still skeptical and the development of a taxation system. The leaders declared further:
“We will regulate crypto assets for anti-money laundering and countering the financing of terrorism in line with FATF [Financial Action Task Force] standards and we will consider other responses as needed.”
With the rapidly evolving Fintech space, IMF chief Christine Lagarde has remained open to the ideas of digital currencies, especially the underpinning blockchain technology which facilitates instant and low-cost global transactions.
