Latvian Government set to Impose 20% Tax on Crypto
Latvia Government to impose taxes on Crypto income
Latvia is preparing laws that would enable it to impose taxes on cryptocurrency. The government is set to impose 20% on income from crypto.
The government came to this decision after a meeting between the parliamentary budget and the committee on taxation. The tax imposed will be known as capital gains. According to the law, revenue from any virtual currency trading is subject to corporate and personal income tax. As it is right now, the government charges residents 23% income tax while 10% is imposed on dividends and interest. Also, capital gains from real estate, intellectual property, and shares are taxed 15%. If this new law is passed, then 20% will be imposed on all cryptocurrency transactions.
A working group led by the Prime minister have been given the mandate to come up with taxation proposals that will be implemented. The team is tasked with conducting a market research before presenting its report. They are also supposed to evaluate the benefits of virtual currency. Although the new taxes will be imposed later, some lawmakers argue that it won’t be fair to some constituents in the Baltic state where cryptocurrency is illegal. As much as the lawmakers argued their points, members of the finance committee said cryptocurrency can function as a means of exchange.
Reasons why Latvia is Imposing Taxes
In the recent past, we have seen countries across the world imposing taxes on crypto. Benefits ,such as using these crypto-taxes for development, have prompted their financial institutions to legalize crypto. The revenue collected can be injected into different development projects. Apart from Latvia, other countries that have imposed taxes on virtual currency include Estonia, Russian, Poland, and United States. Each of these countries has a different tax system in place. However, the Estonian government has imposed both tax and VAT. Estonia seems to be in the vanguard of crypto-developments and recently said that they intend to build the first blockchain enabled e-residence,
While other countries are busy imposing taxes and regulations on cryptocurrency, others are not. In Belarus, no taxes are charged on cryptocurrency. Crypto was legalized by a presidential decree which revoked imposing taxes on cryptocurrency. It also introduced tax incentives and tax breaks until the year 2023.