Previously, “What is not a cryptocurrency?” Medium writer Süleyman Girgin, whose article we shared, now continues to inform crypto money investors and enthusiasts with his new article titled “Cryptocurrencies and Tax”.. We share this article containing valuable information with you, our valued users.
One of the aphorisms I heard the most during my undergraduate education in the department of finance is Benjamin Franklin’s “two things are certain in life , taxes and deaths”. When we look at the historical process of humanity, we observe that the tax has always been “strict” and “sharp” since the early ages (even if some periods were irregular) in a way that justifies this aphorism.. Even though there were periods when central authorities were questioned due to heavy taxes, as in Magna Carta, tax has always continued as one of the instruments used by states to maintain their power.. But in the last centuries, with the idea that the wealth of states/kings/emperors is based on the wealth of the people, there have been some relaxations in taxes from time to time.. An important reason for this relaxation can be attributed to the fact that as the freedom of data increases, taxpayers have the opportunity to question and follow the tax authority.. Since the public authority, which creates a budget by collecting taxes, has to regularly transmit information/data to the assemblies every year, our taxes are used more effectively than thousands of years ago.. Although the imagined optimization cannot be achieved, with the faster mobilization of information, the tax policies of central authorities can be questioned in areas that the public can follow, such as the public assembly/social media.
Nowadays, there are those who comment that a power is emerging against the states, which will weaken the tax collection power even more.. The blockchain ecosystem, which provides the opportunity to transfer a value out of the control of the central authority, whispers that the upcoming process will be very thought-provoking for central authorities.. In this century, where we experience the weakness of central authorities as the freedom of data increases with liberalism, we see that the internet has loosened the control of data even more.. When data travel continues by getting rid of the centers in the blockchain ecosystem, there is a risk of weakening the control of taxes, which constitutes the economic power of states.. Therefore, we can say that states have to take quick and effective solutions.. However, there are some who think that some of the tax issues should also be discussed, since there will be no need for some state institutions providing intermediary services.. Therefore, it is possible to foresee that the definition of taxpayer, tax collection process and tax issues will change in the upcoming period.
In a world where there are ambitious studies aiming to open the immortality in the aphorism of “Two things are certain in life, death and taxes” Another claim in the aphorism is that the existence of crypto money technology in the blockchain ecosystem is claimed to be controversial.. Although there is still the only sharp truth that tax is immortal and people are mortal, we can observe the possibility of an informal economy with the widespread use of cryptocurrencies.. In this article, we will analyze the relationship between crypto money and tax.. Now, let’s have a look at the simple definitions without going through this topic,
What is tax ?
In order to finance public services, the state is determined by individuals and institutions according to their ability to pay. Monetary value that he extorted “by law”. (Note: Even if we gave volunteers, “forced” was written because we had to give). (Note: 2 In August, it was decided to take taxes from automation in South Korea.. It may have gone down in history as the first tax demanded from an asset other than individuals and corporations.. We can also interpret this tax, which was issued to combat artificial intelligence, as the struggle of the biological entity that established the states with artificial intelligence, which is the technological entity, in the economy.). The state has also specified by law when this tax will arise, that is, on which subjects the tax can be collected.. Due to the principle of the legality of the tax, it cannot impose and collect the tax whose subject is not clear.. The principle of legality of tax, which is guaranteed by the constitution, aims to protect the individual against arbitrary practices.
The tax types that are the subject of this article are as follows. Although crypto money technology is predicted to have an impact on many tax issues, we will only consider them in this article, as the types of close discussions are on income, goods and services taxes.. For those who want to examine the taxes collected by the government in more detail, I leave the link here https://intvd.gib.gov.tr/internetvd/html/vergi_turleri_tr.html
- Taxes on income
- Goods and taxes on service
Can cryptocurrency be taxed ?
Before answering this question, what is cryptocurrency? We must agree that. Although we do not agree on the definition, the public authority needs to make a definition in order to respond to crypto money according to tax law.. If the definition of the tax issue is clear, we can start discussing the mechanism.. But I think we haven’t gotten to the mechanism yet.. Because states, our state and investors continue to argue about the economic definitions of crypto money, and they should.. For example, very different statements come from lawmakers in Turkey.. While one of our ministers defines the Ponzi scheme, another of us defines it as a bubble and a worthless asset.. In the midst of these discussions, the Governor of the Central Bank explains that “it can be a tool that can provide economic stability in the future”.. In the same days, the head of the ISE announces that they are working on a domestic crypto money project.. On the days of the Ponzi scheme statement, Chief Advisor to the President Cemil Ertem wrote in the Milliyet Newspaper, “Economics is not stupid; Don’t make fools of us either!” “Very soon, all countries will develop commercial-electronic databases and its public and local means of exchange (Bitcoins) that provide this encrypted transaction tracking,” he wrote. He expresses a positive opinion by saying (http://www.milliyet.com.tr/yazarlar/cemil-ertem/iktisat-aptal-degildir-bizi-de-2572173)/.
As can be seen above, there is no agreement on the definition of crypto money.. In fact, no further definition has been proposed.. It is important to agree on the definition. Because the definitions to be made will help us understand the perspective of the fiscal on taxation.. The Central Bank, the CMB, the Ministry of Finance and even the Undersecretariat of the Treasury these days created boards for the future of cryptocurrencies.. We will follow the process closely…
Being the first cryptocurrency based on an article in 2008 “Bitcoin”, which has the feature of “money”, as the name suggests, defines itself as “money”.. Bitcoin and its derivatives, which claim to fulfill the functions of money, are these mathematical assets that are designed to be money, even though their volatility is high in this period.. So, can it meet the purpose of being money? Now let’s look at some functions of money.
- It is a medium of exchange: Bitcoin or its derivatives show sudden ups and downs or rapid rises due to their new debut on the stock markets.. Governments, the financial world, or some manipulative misinformation also have an effect on these sudden movements.. Therefore, as the benefits of cryptocurrency technology are accepted by the wider community, the value of manipulative explanations will decrease.. While many institutions accept payments with Bitcoin, some institutions accept different cryptocurrencies other than Bitcoin due to sudden ups and downs.. But it is certain that exchanging with cryptocurrencies is practically possible and more functional.. In our designed future life, it is predicted that we will make all changes faster, cheaper and safer with cryptocurrencies.. Therefore, cryptocurrencies will provide us with this opportunity when we want to exchange our machines in our lives, purchase services or change our assets.
- A measure of value: We expect money to measure the value of our goods and services. Cryptocurrencies have managed to become a measure of value for goods and services in the market even before they are legalized.. News on this subject is received from Turkey or from many parts of the world.. We got the latest news from KFC. Announced that it can determine the value of its services with cryptocurrencies.
- It is an investment and savings tool: Perhaps the most prominent feature of cryptocurrencies in this period is that it is valued as an investment or savings tool.. In the digitalization process of our wealth, cryptocurrencies, which are seen as a safe and cost-free tool, are also in the forefront as an investment.. It will provide a high return rate as an investment until the digitalization process is completed.. However, coins with a limited number of coins such as Bitcoin will always continue to be valued like gold (This prediction is not investment advice :). There is also a technology that all cryptocurrencies promise. As the technology promised by these cryptocurrencies increases in use in our lives, their investments will become valuable.. That’s why we will research these technologies and invest in those promises so that we can detect companies that may be the Apple of the future long ago.. These dynamic targets of cryptocurrencies will ensure that it always maintains its investment feature.
- Not an economic policy tool: Yes, it does not fulfill this function of fiat currency. It even claims to destroy this function of fiat money.. Because the central authorities, which have determined the money supply and economic policy in the last centuries, have caused high inflation.. After 2008, the “free” money printed by the United States forced all countries. It continues to push. It seems to resolve this issue, where fiat money is the most criticized.
Cryptocurrencies meet the above functions. There are many institutions and individuals who think that it is necessary to introduce the definition of “money” for. But the general trend is to accept it as a digital commodity or commodity – perhaps in order to control it.. In many countries such as England, Germany, America, serious studies are carried out with this definition for the taxation of crypto money.. It seems very likely that it will be a tax subject with a similar definition in Turkey.. There is also the issue of the production (mining) of crypto money. The profit from this production process seems suitable for the income tax issue. Although the increase in value caused by the demand of cryptocurrencies in the stock markets is a controversial area for taxation, this is not the case in terms of production.. Natural and legal persons are likely to face taxation during this production process.
How are cryptocurrencies taxed
In terms of earnings,
Central authorities do not Although they ignore losing control and enter the process of legitimizing cryptocurrencies by taxing them, we see that they have to solve a more important issue.. Because they face the difficulty of determining the gain. Where previously only one group could reach Swiss banks or tax haven countries, nowadays we are faced with the possibility that everyone can.. The income from the increase in the value of around 1,400 cryptocurrencies in multiple digital wallets seems difficult for the tax authority to determine if individuals do not declare it.. We may need the “where did you find it” law again due to the difficulty of detecting the values in these digital wallets, which can only be accessed with anonymous information.. If we analyze according to the draft prepared in America, it is planned to calculate and tax the value difference at the time of sale of a crypto money bought from the stock market.. In this draft, we can determine the income after making a sale by transferring it to the bank.. However, with the widespread use of cryptocurrencies, detection will not be possible if we purchase goods and services within the system.. In this case, crypto money holders will have evaluated their earnings without using the intermediary financial institutions of a central authority.. Here, individuals or service providers will need to declare with “consent”. Considering the real persons or institutions that do not declare with “consent” even in the current system, the central authority should make great efforts to resolve the systemic deficit.
In Terms of Goods and Services Tax
Those who obtain cryptocurrencies domestically pay the VAT of the commission realized during the buying and selling process.. Taxpayer exchanges also pay taxes on commission income.. There is no problem with this. However, this tax is not available for foreign exchanges.. Those who obtain crypto money from some exchanges abroad may not face any tax.. In case of heavier taxes, stock markets of countries without tax control will receive more attention.
Composed of buying/selling goods and services tax is also discussed. There are some problems with organizations accepting payments with cryptocurrencies these days.. Organizations that declare that they normally accept payments in “foreign currency” are required to register these payments as “foreign currency” after receiving them.. When they convert these non-Turkish Lira currencies into Turkish Lira, they must also account for the difference.. However, since there is no such regulation, the “Law on Payment and Securities Settlement Systems, Payment Services and Electronic Money Institutions” cannot meet this need.. I think that it is necessary to wait for the law on accounting for cryptocurrencies so that these payments do not cause problems later.. However, although accounting is possible, it will be very difficult to control service providers who do not declare.. There is a need for mechanisms that motivate the tax process in this regard.. (*)
For example, we come across news that the Chinese state wants to remove tax offices and tax returns with the blockchain ecosystem in order to collect taxes.. However, for this, it is necessary to use the platforms determined by the central authority in the blockchain ecosystem.. It is thought-provoking how such statements will come to life.. Because while it is very easy for China to censor Google for years, it is impossible to block internet services that do not work with a centralized system.. For this, you need to unplug the internet.. No state will agree to this.. In any case, such a solution is impossible for states that have brought their infrastructure to the internet entirely.
Is a retroactive declaration required if there is a tax regulation?
Tax Since the subject has not been enacted yet, there is no question of taxation.. If there is any regulation, tax will start to be incurred after the date of regulation.. Laws don’t work backwards.
I wanted to write a story where we can all argue on the subject with simple definitions without getting bogged down with laws.. I will share the more detailed report with my thesis. In this process, I plan to share the developments and practices in the countries from time to time on my blog.. But to summarize,
- For companies that want to use it as a tool of change, it provides an immediate accounting opportunity. Laws should be made,
- Income does not seem easy to determine,
- Motivating arrangements should be developed for tax declaration with consent,
Finally, if it becomes law to declare with consent, it is interpreted that we can receive calls from tax offices with the regulation made in 2016, although it is not the “where did you find it” law.. With the change in the article, tax offices will be able to question your earnings if they detect your conspicuous consumption.. If taxation of your earnings from crypto money becomes law, tax offices will be your strict followers with the opportunity provided by this change.
We are a very dynamic team. the process is waiting. It is impossible for states to be hostile to cryptocurrencies and the blockchain ecosystem that gives life to them.. Because hostility to this ecosystem, which will meet many needs of states, is no different from hostility to the internet.. States will also seek ways to get rid of centralized structures on the internet with the blockchain ecosystem.. Therefore, since it cannot completely block the internet, blockchain products will always exist in our lives by developing.. We will continue to monitor the transformation of states with the blockchain ecosystem together.. However, it may be more logical to make positive regulations that will attract the attention of the digital world, such as Belarus and some African countries such as Estonia.. With such arrangements, we will be able to attract the attention of investors and host projects that will create added value.. Therefore, we are waiting for the regulations to be made for applications that motivate them to internalize the still not well understood blockchain ecosystem.
Source: Medium -Süleyman Girgin
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