On November 19, 2024, amid a bullish market, Taiwan's Ministry of Finance announced plans to review tax regulations concerning cryptocurrency gains. This move aims to address significant issues of tax evasion linked to digital assets.
Finance Minister Chuang Tsui-yun acknowledged during a legislative hearing that the current system is ineffective in collecting taxes from individuals trading cryptocurrencies. Lawmaker Lai Shyh-bao emphasized that profits from crypto trading should be subject to income tax.
Despite the Ministry's claims, doubts were raised about the enforcement of these tax regulations. The Taxation Administration's Director, Sung Hsiu-ling, stated that investors must file taxes, but Lai countered that without audits, many would not comply.
The National Taxation Bureau of Taipei confirmed that 26 licensed crypto exchanges are currently subject to business and corporate income taxes, yet details on individual tax collection remain vague.
In response to the growing concerns, the Financial Supervisory Commission (FSC) is drafting a new digital asset tax law, aiming for implementation within three months. However, legal experts warn that existing territorial tax principles may complicate enforcement, particularly for gains from overseas exchanges.
As it stands, individual income tax applies only to earnings generated within Taiwan, with a threshold of $230,000 for taxable overseas income in the 2024 fiscal year. This creates loopholes for potential tax evasion, especially for transactions disguised as overseas activity.
Ultimately, experts suggest that a revision of the current regulations is essential to effectively tackle the issue of crypto tax evasion in Taiwan.