The Ministry took action! Cryptocurrencies will be taxed

The ministry will share with President Recep Tayyip Erdoğan the regulation that includes taxation on the purchase and sale of cryptocurrencies, which have reached 3 million investors in Turkey and whose use is increasing rapidly.

The Ministry of Treasury and Finance has shaped the legal regulation on cryptocurrency, which is on the radar of millions of investors both in Turkey and around the world.

The ministry will share with Erdoğan the regulation that includes taxation on the purchase and sale of cryptocurrencies, which have reached 3 million investors in Turkey and whose use is increasing rapidly.

CONSUMER PROTECTION IS THE PRIORITY

The study defining the types of crypto assets was carried out in cooperation with the CMB, Revenue Administration, Central Bank, Banking Regulation and Supervision Agency.

The legal regulation, which sets out the obligations, audits and responsibilities of these platforms towards consumers, clarifies the principles regarding the 'acquisition, purchase, sale and transfer' of crypto financial assets. Both investor protection and supervision and oversight mechanisms in cryptocurrency trading are strengthened.

CAPITAL REQUIREMENT TO BE SOUGHT

With the work carried out by the Revenue Administration, capital requirement will be sought and taxation will be imposed on platforms related to crypto assets. Income from purchases and sales will be taxed.

Lütfi Elvan, Minister of Treasury and Finance, stated that the types of crypto assets will be defined and announced that they will set out the principles regarding the obligations of the platforms. Elvan stated that they will take the necessary steps if President Erdoğan deems it appropriate.

Stating that the Revenue Administration is conducting a study on taxation by taking into account the practices in the world, Minister Elvan said, "We have made all the necessary preparations for its supervision.

We have obliged these platforms to report their customers who make suspicious trading transactions. We have made it obligatory to report those who make transactions over 10 thousand liras to MASAK."

TAX UNCERTAINTY FOR EARNINGS

There are taxation practices for companies that earn commission income by providing brokerage services in cryptocurrency and companies that earn trading income. In order for cryptocurrency to be taxed, its types must first be defined.

In the event that cryptocurrency is accepted as a security, from the source of stock trading gains 10 percent withholding tax such a practice may be implemented. Cryptocurrency trading platforms that obtain brokerage permission may be subject to withholding tax on behalf of the user.

DIFFERENT PRACTICES AROUND THE WORLD

There are different ways of taxing cryptocurrencies around the world. The US levies income tax on cryptocurrency holders, Germany does not levy tax on values less than 600 euros.

South Korea levies a 20 percent tax on earnings, while Hong Kong, Singapore and Malta do not

MONETARY VALUE OR ASSET VEHICLE?

In Turkey, there is no legal infrastructure or regulation, including tax legislation, regarding cryptocurrencies. Whether cryptocurrencies are a monetary value accepted as a means of payment or an asset instrument is one of the most debated issues.

Looking at existing solutions to cryptocurrencies, it is clear that there is no physical backing behind many of the digital values produced by chain-of-record technology.

Because digital assets are not based on a real value, they are sold in unregulated markets rather than in regulated money markets.

For this reason, cryptocurrencies are open to all kinds of speculation and their market values can change rapidly.