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It will be difficult for regulators to tax bitcoin transactions

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A recent proposal by the Organization for Economic Cooperation and Development (OECD) to regulate the taxation of bitcoin (BTC) transactions may not produce the benefits regulators hoped for.

The reason seems simple. The nature of the emerging ecosystem may make it difficult for tax authorities to know exactly what is being charged for bitcoins. Whether a person has filed a tax return In cryptocurrency trading.

This was established by tax strategy specialists at blockchain analytics firm Chainalysis, who. rated the extensive paper presented to G20 world leaders by the OECD Secretariat, a body whose purpose is to coordinate economic and social policies at the international level.

The proposal, known as CARF and available for consideration in the website OECD website, points out that companies related to the Bitcoin “play a central role” in the emerging market.

This is the point at which the cryptocurrency exchangesthe bagsThe following are examples of cryptocurrency and other investment platforms, brokers, and ATM operators related to bitcoin and its ecosystem.

The paper proposes to consider these companies as “contributory cryptoasset service providers.” It means that must provide the tax authorities with the information necessary to know whether or not a taxpayer has filed a tax return.

However, the constant cross-border flows of cryptocurrencies, in addition to the increasing number of users self-depositing their assets and the growing number of decentralized exchanges, will make it difficult to realize these demands..

According to Chainalysis analysts, these are precisely the elements that will lead authorities to lack the detailed information needed for their fiscal objectives..

In many cases, tax authorities will not have sufficient information to assess whether a taxpayer has fulfilled his or her tax obligations.

Chainalysis Report.

Tax compliance will grow

Although it may be difficult for tax authorities to assess the level of compliance of cryptocurrency users, analysts also believe it is likely that there will be an increase in tax compliance as it is implemented. the proposed framework.

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According to the OECD policy paper, the proposed standards will have to be transposed into the legislation of the 38 OECD countries, including Colombia, Costa Rica and Spain.. This, with the ultimate goal of collecting information directly from vendors who declare their activities with cryptocurrencies.

Similarly, they see a possible increase in relationships between bitcoin-related companies reporting and the tax agencies of OECD members. This would respond to the “desire of tax authorities” to understand the difference between the information provided through the CARF framework and what taxpayers themselves report.

The new framework thus represents a further step forward. by governments to control cryptocurrency activities.which means fully identifying those who use these assets.

Analysts believe that, at this time, intermediaries, such as stock exchanges, are unable to handle the situation, are the ones controlling trading in the cryptocurrency market.. Far from the person to person (peer to peer or P2P), proposed by Satoshi Nakamoto, the creator of bitcoin, more than a decade ago.

Time will tell whether the level of true decentralization and peer-to-peer transactions will increase as a result of CARF, the Journey Rule and other regulatory developments, and what the response of governments will be.

Chain of Analysis.

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