IMF warns crypto threatens tax collection
International Monetary Fund (IMF) researchers published a working paper describing the challenges introduced in collecting taxes related to cryptocurrencies. Specifically, the report highlights how, given that crypto currencies act as both investments and currencies, the appropriate Tax treatment has become more complicated. It also explains how the pseudonymous nature of crypto currency systems makes collect ion and enforcement of the Tax code more difficult. The paper discusses how, in most cases, cryptocurrencies are treated as property for the purpose of income taxes. This means they generally have capital gains taxes — adding a significant administrative load for those who choose to transact using them, and requiring calculations for every transaction. For value added taxes (VAT) and sales taxes, the IMF highlights how the pseudonymous nature can make collection difficult and therein the need for accurate records of when transactions occurred due to the volatility in pr...