The Ministry of Tax, Denmark has proposed the Government immediately review prevailing taxation laws, rules and regulations. The Ministry is of the view that changes need to be brought into the existing laws for incorporating crypto within the tax net. Ministry thinks that the existence of crypto in the country is giving rise to unorthodox challenges which require special strategies to deal with. While the top tax collecting authority of Denmark sees crypto trading as a business that is risky and taxpayers to avoid tax liabilities.
As per the latest local media reports of Denmark, the national tax authority is concerned about the increased use of cryptocurrencies. However, the issue with the authority does not relate to cryptocurrencies’ increase use. In fact, the issue according to the tax collecting authority is the avoidance and evasion of tax by taxpayers because of cryptocurrencies.
Keeping in view its concerns, the authority went to the Taxation Ministry and pointed out the problem. After several meetings, the Tax Ministry is convinced that cryptocurrencies are giving rising to various challenges which are unorthodox. Yet there are no means available with the authorities to deal with these challenges. The Ministry has therefore suggested that in order to deal with crypto-related issues, amendments are necessary for the existing tax laws.
There was yet another issue that forced the Ministry to present the proposal of amending the laws. The Ministry noted that the taxpayers, who also owned Bitcoins and other digital assets, did not pay any tax against their crypto holding. Resultantly, the tax authority failed to collect any tax from specific taxpayers who deliberated did not disclose their crypto holdings. The authority also noticed that almost 2/3 owners of Bitcoin successfully evaded tax.
Now the proposal has been placed in which the Ministry has apprised that the authorities do not have sufficient machinery. It said that taxing crypto holdings is a difficult task that requires out-of-the-box strategies. In addition, the information system does not have the necessary tools through which crypto ownerships can be monitored, said the Ministry.
It was further told by the authority that the existing tax laws are 99 years old. There have been many changes since then in accordance with the evolution of the financial system. However, the present legal framework is not equipped to deal with the challenges posed by cryptocurrencies. There is an urgent need to take fintech companies on board to come up with a solution. There are huge increments in the number of crypto frauds taking place in the world and globally. While it is obvious that crypto is going to stay, then it has to be made sure that the public is protected against crypto frauds.
Also, it has to be ensured that crypto owners pay their taxes so that the legal framework for crypto can be immediately provided.