Global Tax Compliance and Regulatory Game of Encryption Assets

Against the backdrop of tightening global encryption asset regulation, two industry experts engaged in an in-depth discussion on hot topics such as cross-border taxation and compliance regulation. They shared their unique insights on issues such as taxation of encryption assets, regulatory games, and ideal tax systems.

Cross-Border Income Taxation Dilemma

There is controversy over which country Web3 practitioners should pay taxes on their cross-border income. Due to the multinational nature of projects and income sources, it is difficult to accurately attribute them to a specific region. The existing tax framework is insufficient to fully cover Web3 business models, and this requires further exploration.

Individual Tax Supplement Cases for Cryptocurrency Trading in Mainland China

Recently, the Zhejiang Taxation Bureau required an individual to pay back taxes due to a case involving cryptocurrency trading, which has attracted attention. Experts believe that as the stock market becomes increasingly connected to encryption assets, the tax issues related to encryption assets will receive more and more attention, and the space for avoidance will become smaller.

Long-term Game of Regulation and Tax Evasion

Experts point out that regulation and "anti-regulation" are a long-term dynamic balance. Large institutions are increasingly focused on Compliance, while the Compliance level of individual investors mainly depends on the amount involved.

The Boundaries of Improper Income and Asset Compliance

Paying taxes does not fully prove the legality of funds. If the funds also violate other financial regulatory laws, even paying back taxes will not affect the penalties from other institutions. Tax compliance and the legality of funds are two different aspects.

Tax Planning Space for Enterprises and Individuals in the Crypto Circle

For ordinary people, there is very limited space for tax planning. However, high net worth individuals and enterprises have more operational space due to diverse income sources, large scale, and numerous cross-border tax issues. The middle class is often a key focus for tax authorities.

Potential Tax Obligations for Mining, Airdrops, and Other Earnings

Different forms of encryption asset income may involve different tax obligations. Mining is usually considered as operating income, airdrops need to be declared only upon disposal, and staking or DeFi income can be classified as capital gains in certain regions. There is some planning space in reasonably defining the types of income.

Practical Considerations for Digital Nomad Identity Planning

Cross-border identity planning requires caution. Even if one stays in a country for less than 183 days in a year, they may still be deemed a tax resident of that country due to other factors. It is advised to keep complete transaction records and report truthfully.

Vision for the Future of Encryption Taxation

The ideal future tax system for encryption assets may be a two-tier structure: infrastructure providers pay taxes to the physical world, while users indirectly pay the network through fees, which in turn supports the real world. As the industry develops, a completely new legal and regulatory framework may be needed in the future.