Just 0.07% Of Investors In India Declared & Paid Taxes On Crypto In 2022, Finds Study
Despite the government introducing a hefty 30% tax as well as 1% TDS on cryptocurrency last year, almost a negligible proportion of investors in India declared and paid tax on crypto last year.
Just 0.07% Of Investors Paid Crypto Tax
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According to a research report by Swedish tech company Divly, just 0.07% of investors in India declared and paid tax on cryptocurrency in 2022. But this trend is not restricted to India, as the numbers are not much higher globally as well.
Globally, "just 0.53% of cryptocurrency investors declared their cryptocurrency activity to their local tax authorities in 2022," according to the study released by Divly, which operates a platform to help crypto holders calculate their taxes. The compliance rate ranged from the lowest of 0.03% in the Philippines to the highest of 4.09% in Finland, it said.
The research report took a novel approach to estimating the tax payment rate: instead of surveying a limited number of respondents, it used a combination of official government figures, search volume data, and global crypto ownership statistics.
The highest rate was recorded in Finland, where more than 4% of crypto investors declared their holdings and accordingly paid tax. Australia ranked second, with 3.65% of investors doing so. The U.S., which boasts the world’s largest number of cryptocurrency users, saw a crypto tax payment rate of just 1.62%. It ranked just below Canada, where 1.65% of investors paid their crypto tax.
Also Read: India's Finance Ministry Puts Cryptocurrency Trading Under Money Laundering Law
Who Has The Most & Least Crypto Tax Payers?
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5 Countries With Highest % Of Investors Paying Crypto Tax
1.Finland-4.09%
2.Austrlia-3.65%
3.Austria-2.75%
4.Germany-2.63%
5.United Kingdom-2.61%
5 Countries With Lowest % Of Investors Paying Crypto Tax
1.Turkey-0.18%
2.Brazil-0.10%
3.India-0.07%
4.Indonesia-0.04%
5.0.03%
Why Such Low Rate Of Crypto Tax Payers?
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Such a low rate of cryptocurrency tax payments around the world likely results from multiple factors. Firstly, the research report's firm, Divly, argues that public awareness of cryptocurrency reporting requirements varies amongst countries and is often too unclear for most users.
It also noted that the higher rates recorded in Japan and Germany could be a result of increased government enforcement. Increased enforcement led to a higher availability of tax calculators and other tax services, making tax payments more accessible to users. Last year, Germany was also ranked as the most crypto friendly nation.
As per the CryptoSlate report, an ongoing global push to introduce clearer tax regulations could lead to a significant increase in crypto tax payments in 2023. The EU proposed changes to its Directive on Administrative Cooperation (DAC) in December 2022, which would require exchanges to share user data with local governments. If the changes are adopted, local tax authorities in the EU would be able to enforce tax payments on cryptocurrency traders and investors.
The U.K. is looking to mandate the declaration of crypto holdings in self-assessment tax return forms starting next year.
On the other hand, the U.S. could also see an increase in cryptocurrency taxes this year. The report mentioned that US President Joe Biden is set to propose changes to crypto taxation in a new budget blueprint for 2024, which would specifically target wash trading and introduce a new tax on electricity for Bitcoin mining. And the increased government oversight of the industry could push more investors to declare their crypto holdings in the coming months and years.
Also Read: RBI Governor Says Next Financial Crisis Will Come From Private Crypto
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