• Divly recently conducted a study revealing that nearly all crypto investors did not pay taxes on their crypto holdings in 2022.
• The study showed that only 0.53% of digital asset holders reported their digital currency dealings to the tax authorities.
• The US had doubled its tax payment compliance rate over the last 5 years, with 1.62% of its crypto taxes paid in 2022.
Tax Evasion by Crypto Investors
A digital currency tax firm, Divly, recently conducted a study revealing that nearly all digital asset investors did not pay taxes on their crypto holdings in 2022. A staggering 98% of crypto investors did not report their digital asset transactions to the tax authorities, evading their tax obligations. The findings were discouraging, noting that only a tiny fraction of investors reported their crypto earnings to the tax authorities.
Declaration of Crypto Taxes
The firm noted that only 0.53% of all digital asset holders it surveyed revealed their digital currency dealings to the tax authorities. Notably, Finland made the highest declaration of its crypto activities, recording up to 4.09% of crypto taxes last year. Australia emerged second, with about 3.65% of investors’ profits in the same year and America managed to hit just 1.62%. On the other hand, Philippines recorded a low 0.03%. All Asian countries yielded 0.20%, while US managed 10th spot according to its rate at 1.62%.
Crypto Gain Taxes Implications
The idea of paying taxes for cryptocurrency gains started back in 2014 when IRS issued “Notice 2014-21”. According to this notice cryptocurrencies are treated as property and not currency for federal income purposes in United States taxation system and many countries followed suit later on by introducing cryptocurrency gain taxes regulations as well as taxation systems for cryptocurrencies trading and investments gains..
Low Tax Payment Compliance Rate
Despite having one off the highest rates (1st/10th), US still managed quite low rate at 1.62%. This is possibly due to Internal Revenue Service (IRS) control over citizens who have or do trade cryptos within US borders or any other place where they reside temporarily or permanently and must declare such assets under local laws with applicable taxation legislation – either if those are citizens or non-residents with such activity taken place within US jurisdiction limits..
Conclusion
Tax evasion has been an ongoing problem since cryptocurrencies have come into existence which needs improvement from governments across different nations regarding proper regulation framework and education to inform taxpayers about potential risks associated with non-compliance with these regulations which could ultimately lead them into trouble either way even if they may be unaware about such regulations when it comes down to personal use cases like trading cryptocurrencies or investing into any other projects related but not limited exclusively into blockchain technology space..