The boom of the crypto market caused governments around the world to pay closer attention to cryptocurrencies. Governments soon realized that crypto is a trillion-dollar industry, and everyone participating in it must share their profits with their countries. Today, many nations worldwide have introduced strict laws regulating the process of crypto taxation. Merchants, that accept cryptocurrencies as payment, often wonder, “Is there tax on cryptocurrency?” The answer to this question is yes, and such merchants can no longer expect their crypto profits to be free from taxes. Businesses dealing with crypto should take the matter of taxation seriously and make sure to pay all of the duties.
Key Points:
- Cryptocurrencies are taxed in the majority of countries worldwide.
- Businesses featuring crypto payments in the UK and Australia have to pay income tax on crypto profits.
- NOWPayments’ crypto payment gateway tools make it easy for companies to monitor their crypto transactions and thus maintain fiscal transparency.
What are cryptocurrency taxes?
Cryptocurrency taxes, just like any other taxes, are the money that individuals owe to their government. Crypto taxes concern digital assets, which are considered property in the majority of countries. The particular procedures involving cryptocurrencies which are eligible for taxation vary from nation to nation. Yet, usually, crypto owners have to pay taxes on their crypto earnings every time they make a gain on their tokens. Thus, every business that sells products or services for crypto has to report on their crypto earnings and pay a corresponding tax. Moreover, in some countries, people who buy products with crypto also must pay taxes. For example, a person who bought one Bitcoin in 2012 for less than $100 and spent it in 2021 on a new car for $50,000 will have to pay a tax on their gains.
Do taxes complicate crypto payments?
Taxes do not complicate crypto payments, just like any other process of getting paid or selling. During the exchange itself, neither merchant nor client has to think about taxes. Nevertheless, a good practice for everyone would be to record the price of the cryptocurrency when they buy, sell, pay with it or accept it. This will facilitate the tax calculation in the future and will make it less stressful. Merchants that use NOWPayments can see each transaction they accepted in their account, so there is no need for them to keep their own record, yet, precautionary measures never hurt anybody.
How do merchants pay crypto taxes in different countries?
Countries around the world have different approaches to crypto taxes and have designed numerous laws that regulate them. Learn about the most exciting crypto tax cases.
USA
The United States is a country with one of the most advanced crypto tax systems. In the US, digital assets are considered property similar to stocks. Therefore, the tax rates applied to crypto are those stipulated by the capital gains taxes. Merchants do not have to pay taxes on the crypto they received as payment if they keep these funds in their crypto account. Nevertheless, once they withdraw their Bitcoin by exchanging it for fiat currencies or products, they will have to pay a tax on the profits, which constitute the difference between the price at the moment of acquisition and the price at the moment of sale.
Australia
In Australia, businesses that utilize cryptocurrency in their activities are subject to several regulations. Companies that sell products and services in exchange for crypto have to report their crypto gains as part of their ordinary income. Subsequently, they will have to pay an income tax on the digital assets they receive as payment. Moreover, Australian enterprises that decide to purchase business items with crypto are entitled to a deduction. At the same time, Australian businesses will still have to pay the capital gains tax when disposing of their coins.
UK
“How do taxes work on cryptocurrency?” and “What is the tax on cryptocurrency” are popular searches on Google in the UK, and it is not surprising since the country has hundreds of businesses that accept crypto. The UK firms welcoming customers with crypto have to include all of the crypto funds they receive in exchange for their products and services in the trading profits. This also concerns companies that pay with crypto to their suppliers. Additionally, the company will have to pay Corporation Tax, and all of the crypto profits generated by it will be subject to Generally Accepted Accounting Practice (GAAP).
Singapore
Singapore is well-known for its welcoming stance towards cryptocurrencies. As a result, Singapore can be considered a heaven for companies that accept crypto as payment. All crypto revenue generated by businesses that feature a crypto payment method is taxed according to the standard income tax rates. Moreover, such businesses also can enjoy tax deductions in different situations. Every company in Singapore that accepts crypto must keep a record of all transactions and determine the total value of each payment they receive. Since there is no capital gains tax in Singapore, businesses do not have to pay any taxes when disposing of their cryptocurrency funds.
India
India is a country that is rapidly developing in every sphere, including crypto. The number of businesses that accept crypto as payment is steadily growing in the country. Indian companies that offer the crypto payment method are taxed according to the head profits tax.
How businesses can accept crypto
Businesses that wish to accept cryptocurrencies can use NOWPayments crypto payment gateway solutions. NOWPayments offers tools such as crypto invoices and a virtual Point-of-Sale terminal that are easy to deploy and can be used by both online and brick-and-mortar stores.
Additionally, merchants with eCommerce stores can set up a crypto payment gateway with plugins. Bloggers and charities can accept crypto donations.
Final words
More and more governments are taxing crypto since it constitutes a potentially massive source of national revenue. Merchants that decide to accept cryptocurrencies should always comply with the existing taxation legislation. NOWPayments’ solutions for facilitating crypto payments allow businesses to easily track all of their transactions.