UK Will Not Exempt Bitcoin and Crypto Exchanges From Taxation

The UK will not exempt Bitcoin and crypto exchanges from taxation. These assets will not be considered commodities or money.

In the UK, the tax agency HMRC has announced that cryptocurrencies are not exempt from the digital services tax and do not qualify as commodities or money. As it is known, many countries have entered into regulations regarding digital services tax. Among them is England. Within the scope of the application in effect since April 2020 in the European country, a tax of 2 percent is levied. Search engines, social media services and online marketplaces with revenues of over £500m globally and sales of over £25m in the UK have to pay this tax. HMRC's latest move has caused confusion and concern in cryptocurrency exchanges operating in the country. According to the news of Telegraph, the institution announced in the notification it sent to these companies that they cannot benefit from the exemption given to companies that provide financial services, therefore they are subject to digital services tax. One of the companies that may be affected by the tax is Coinbase, one of the largest cryptocurrency exchanges in the world. Coinbase reported over 21 million euros in sales revenue for its UK leg last year. However, the company's global revenues have quadrupled in 2021 and will likely cross the £25m threshold in the UK as well. On the other hand, the professional organization representing the industry, CryptoUK, argues that it is unfair to treat cryptocurrencies differently from other financial assets and is lobbying the ministry with HMRC on this issue. This latest step is described as a new blow for cryptocurrency exchanges, after the heavy licensing imposed by the UK's financial market overseeing and regulating body FCA. It is also stated that it will bring higher transaction fees for those who trade cryptocurrencies.