In the United Kingdom, bitcoin exchanges are being targeted for tax evasion. This happened just a few days after HMRC announced that Bitcoin exchanges are not eligible for financial services exemptions.
The UK government has now brought all existing Bitcoin exchanges into its Treasury’s technology tax. With the country’s Bitcoin exchanges facing a tax disaster, the UK tax administration has said that all online crypto exchanges would be required to pay tax as well.
For example, Amazon, Google, and Facebook are all required to pay tax to the UK Exchequer. However, the tax decision looks to be having a significant negative impact on Bitcoin exchanges in the country. On the one hand, this appears to be unfavorable to crypto firms seeking to provide Bitcoin services, notably in the United Kingdom.
Furthermore, because Coinbase has a subsidiary in the United Kingdom, applying the Bitcoin exchange tax poses a direct danger to it. Meanwhile, according to the source, CryptoUK is currently engaged in a little battle with the HMRC and the Treasury on claims that they are being discriminatory in their treatment of crypto compared to other financial assets.
The HMRC responded by saying,
There are many crypto assets, each of which has different characteristics. Since cryptocurrencies don’t represent money, commodities, or financial contracts, it is unlikely that cryptocurrency asset exchanges will be able to benefit from the exemption for online financial markets.
Furthermore, according to Ian Taylor, head of CryptoUK, the authority’s decision is a major setback for crypto exchanges that have to go through the Financial Conduct Authority’s laborious licensing process (FCA). Furthermore, the adoption of this new tax is likely to result in exorbitant fees for crypto dealers.