HomeTechnologyNew developments in post-cryptographic taxation

New developments in post-cryptographic taxation

It can be considered a breakthrough in the life of the Hungarian cryptography economy that, according to the principles set out in the spring tax package of the Ministry of Finance, taxation on cryptographic assets will be simplified from 2022, and those affected can expect significant tax cuts. Following the proposal developed by the Blockchain Hungary Association, the process of taxation on cryptographic assets in the spring tax package of the Ministry of Finance will change significantly from 2022.

compared to the approximately 30% taxation known so far, the tax rate on cryptographic income is only 15%.

Computerworld: definition of cryptographic devices. What benefits can this have for the domestic sector in the short and long term?

Kornél Kalocsai: First of all the Law on the Prevention and Suppression of Money Laundering and Terrorist Financing, due to the European Union Directive, defined the concept of cryptocurrency as a virtual currency. Let’s face it, this didn’t shed good light on cryptocurrencies.

Personally, I am very positive that the concept of cryptocurrency has appeared in the PIT Act. First, the cryptocurrency market has moved from the current gray – tolerated – zone to bleaching, towards a regulated market. This will mean that the market will be cleaned up, non-pure players will disappear and trading in cryptocurrencies will become safer.

It is important that the definition in the law provides a reference for in legal proceedings related to cryptocurrencies: cryptocurrencies – this is the most common name – ie cryptocurrencies is an existing term under Hungarian law. In practice, this means that it is not necessary to examine in a court case, for example, what bitcoin is, it is sufficient to refer to the definition of the PIT Act.

CW: When will the legislation be valid, from which tax year can taxpayers take advantage of it?

Kornél Kalocsai: Amendment to the PIT Act on cryptographic devices officially 2022 effective from 1 January, with the possibility of applying the amendment for the year 2021! This means that the first tax return with reduced tax can be filed until 20 May 2022 through the PIT system. The amendment on cryptographic assets is also an important step because it has made cryptographic transactions similar to the so-called Controlled Capital Market Transactions, thus allowing only PIT (not social contribution tax) to be paid, and tax offsets can be applied (compared to losses in previous years).

In addition, there is the so-called black box principle proposed by the Association, which we take the income from the crypt market (the black box) and convert it into dollars, euros or forints

CW: How did the Blockchain Hungary Association help the work of the Ministry of Finance? What was its role in the preparation of the law

Kornél Kalocsai: Basically in the development of the basic concept and the we had a role in modeling processes. Already in 2019, the Association prepared a blockchain and crypto market regulation concept, in which we also proposed to rationalize the taxation of cryptographic devices. We reworked this proposal and made it more detailed for the ministry. On the part of the Ministry of Finance, we experienced continuous openness on the topic, we also consulted several times with Norbert Izer, Secretary of State for Tax Affairs, and László Szatmári, Head of Department (Income Taxes and Contributions Department). At his request, we also conducted an international tax comparison, focusing mainly on neighboring countries, which confirmed our original idea. Subsequently, the Ministry prepared a textual proposal to amend the PIT Act, which was already extended with additional benefits (eg tax amnesty, tax exemption for small items)

We were given the opportunity to comment on this proposal, so with our advice we have helped to make the declaration logic even simpler by applying the black box principle mentioned above.

Through our members we are very familiar with the needs and movements of the cryptocurrency market as several of our members have cryptocurrency or blockchain businesses – including me I am also the founder of a cryptocurrency business. We can bring this real market experience into the development of regulatory concepts.

Of course, we have additional tasks, as NAV needs to develop the CSR interface, and there may be quite a few more detailed rules for making actual returns.

)

CW : What is the amount of declared tax surplus the Association expects? Does the organization have any research on this?

Kornél Kalocsai: The size of the crypto market for countries

There are several aggregator pages that present the size of this market on a daily (or even hourly) basis. However, no one can say exactly how much of a country it has. There are not many estimates available either, they mainly only examine the share of larger countries. holds the world’s GDP. We have further refined this ratio with the so-called DESI index, which measures the level of digitization in the EU by country. Based on the data at the end of 2020, we estimate the size of the Hungarian crypt economy at HUF 300 billion. Of course, this model is not perfect either, and its methodology could be further deepened, but it provides a good starting point for determining orders of magnitude. Based on feedback from crypto market participants, the estimate may also be appropriate, especially as the bitcoin exchange rate fluctuated around USD 20,000 in December 2020 and is currently around USD 30,000.

CW: tax cuts affect individuals. Is it conceivable in the future to introduce favorable tax conditions for businesses as well? Is there a demand for this in the domestic market?

Kornél Kalocsai: It is much simpler in the case of enterprises the situation in the field of taxation. There, the profit from cryptographic assets is considered to be the same as if it were income from trade, so it is subject to taxation according to the given company form and method of taxation (eg classic TAO, KATA, KIVA, etc.), so they are also fundamentally favorable. it is no different. In the case of businesses, the issue of cryptographic tools raises much more accounting issues: cryptographic tools currently need to be recorded as receivables, but this should be reconsidered, as there may be problems with their viability.

Our Association has already initiated an amendment to this rule. , and the Digital Welfare Program and the National Data Wealth Agency are constantly working on proposals to regulate blockchain and cryptographic devices, as we believe that solutions based on blockchain technology will be as deep a part of our lives in the future as Internet-based applications today.

Hardware, software, tests, curiosities and colorful news from the IT world by clicking here

Follow World Weekly News on

Sandra Loyd
Sandra Loyd
Sandra is the Reporter working for World Weekly News. She loves to learn about the latest news from all around the world and share it with our readers.

Leave a Reply

Must Read