3 taxation options for cryptocurrencies | Ayhan Tüfek

Whether profits gained from cryptocurrencies should be taxed is one of the most frequently asked questions about the ecosystem in Turkey.

Ayhan Tüfek
Independent Accountant/Financial Advisor

So far, the government has not made any decisions about the taxation of the profits gained from cryptocurrencies. Taxation is currently applicable only to cryptocurrency miners, brokerage firms providing brokerage services to obtain commission income and firms earning trading income.

The taxation of profits obtained through cryptocurrencies depends on the government’s approach to “cryptocurrency.

There are 3 options:

  • Security: Within this framework, the Capital Markets Board (CMB) would be required to introduce regulations. Normally, the CMB considers that cryptocurrencies do not fall in this category; therefore, it is reluctant to evaluate cryptocurrencies as securities. If such regulations were to take effect, the CMB would grant a “stockbroker license” to cryptocurrency trading platforms and the relevant platform would impose 10% withholding tax on behalf of the user as in the case of 10% withholding tax imposed on the source of income from common stock trading. Thus, cryptocurrency trading platforms would act as an intermediary in taxation.
  • Commodity (gold, silver, wheat, etc.): In this case, taxation would depend on whether cryptocurrency trading is carried out on an ongoing basis or intermittently. If it is ongoing, then the users would be treated as taxpayers. The user would then pay both Value Added Tax and Income Tax. If there is an irregular income, only Income Tax would be applicable to the profits above a certain limit. For the year 2020, income tax is applicable to the irregular income above TL 40,000.
  • Money:  It is the least likely option to define cryptocurrencies as “money” within the framework of regulations. In such a case, the individuals would be exempt from tax liability as in Euro and USD. As the workload of the Central Bank of Turkey would increase in such a case, this option is more unlikely than the others.

These 3 options are evaluated in more detail under various other sub-categories. No decision has been made about whether users would be subject to tax liability. On the other hand, if firms are engaged in trading and earn profits in return, they are obliged to declare such income as gains from appreciation.

Finally, we would like to remind you that KPMG, which offers auditing, taxation, and consultancy services, believes that cryptocurrencies should be considered as securities.

Ultimately, the question about whether cryptocurrencies would be subject to taxation will be answered once a decision is made and regulations are issued accordingly.

Bu içerik en son 26 October 2022 tarihinde güncellenmiştir.


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