New Zealand to review cryptocurrency taxes

The New Zealand Tax Office is assessing the prospects of eliminating the tax on cryptocurrencies.goods and services.

Under current law, bitcoin andother digital currencies fall into the “ownership” category and are taxed at 15% for goods and services when transferring an asset from one owner to another. This approach causes a lot of discontent, because in fact a double taxation situation arises when the user later pays income tax.

The country's tax office recognizes that suchthe situation is “unfavorable”, and suggests not applying a tax on goods and services in relation to cryptocurrencies, but at the same time leaving the income tax. According to the regulator, the functions of cryptocurrencies are not limited only to the investment component, and therefore it is sometimes difficult to apply the current tax legislation to them.

The department plans to make sure thatcryptocurrencies were regulated by the same tax law, which covers other alternative investment products. However, when solving this issue, a problem arises - various tokens can be used in many scenarios and it is impossible to put them in one category.

In the future, tokens that are used ascurrency or security, can be exempted from tax on goods and services, while for some other types of taxation will remain the same. The ministry acknowledges that creating a classification of tokens that covers all areas of their application can be difficult.

New Zealand Tax Office willaccept comments from interested market participants until April 9th. Note that previously similar taxation of cryptocurrencies was practiced in Australia, but back in 2017 it was abandoned.

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