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Over the years, China has had a complicated relationship with the cryptocurrency industry. The Chinese government has been indecisive on a range of policies, from a blanket ban to investigating blockchain’s usefulness. Most recently, some local governments have started imposing hefty income taxes on cryptocurrencies.
Specifically, many crypto whales, miners and other investors have been audited by their local tax departments for personal income tax since early 2022 and have said they are still awaiting results, says Colin. Wu reported on January 25.
According to the report, this comes after several major domestic exchanges filed extensive information on whale trading with tax authorities, resulting in investment profits or individual cryptocurrency investors and many bitcoin (BTC) miners. 20% personal income tax.
Different stances on digital assets
This practice means that the Chinese government may have finally recognized the legal status of cryptocurrencies, but the reality is more complex, with tax and financial authorities having differing views on the legality of crypto. I have.
October 2021, china tax newsA subsidiary of the State Administration of Taxation .The income they earn from China.
At the same time, China has imposed strict restrictions on illicit financial activities in the form of digital currencies, but has not prohibited individuals from holding Bitcoins or similar within the current legal framework. , virtual currency transactions are defined as virtual currency. It is a “vulnerable civil act,” but it is not expressly prohibited by law.
Meanwhile, an article in the China Public Prosecutor’s Journal from November 2022 highlighted that the government has stepped up scrutiny of digital assets such as Bitcoin in recent years, citing the substantial financial risks associated with them. increase.
The tax department has its own tax base, according to senior tax experts, as tax scrutiny on whales has become tougher and tax authorities have recently started scrutinizing the overseas income of the wealthy.
Complex Crypto Connections in China
More than nine years ago, China began restricting the use of cryptocurrencies, primarily Bitcoin, by its banks, but thanks in part to its restrictive measures, China has unwittingly become a silent crypto whale, becoming one of the top ranked one. 10 countries with crypto adoption.
Interestingly, FTX’s bankruptcy filing recently revealed that mainland China has the third highest share of cryptocurrency exchange customers.
In fact, as a result of the confiscation of a large amount of Bitcoin and Ethereum (ETH) from the Plus Token scheme in 2019, China’s possession of cryptocurrencies is so vast that it could destroy the entire cryptocurrency market in seconds if it chose to do so. There is a nature.
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