When it comes to tax on cryptos, most countries haven’t yet implemented any rules or regulations. This has left many people filling in their tax returns incorrectly and possibly paying either too much or too little tax on their crypto hodlings. While South Africa, Malta, and China have already announced their stance towards taxes on cryptos, the rest of the world remains in the dark. Poland is the latest country to join the list of nations with clear rules on taxes, and the new bill it has passed does much more than outline new tax brackets for cryptos.
The new laws define cryptos and how they are categorized. It also addresses the implementation of taxation laws for crypto activities and holdings, as well as touching on crypto mining activities. These new Polish crypto bills will help put Poland back on the crypto map.
The bill begins by defining cryptocurrencies and gives a guide to the new categorizations. The first category is cryptocurrencies, in this group fall traditional cryptos such as Bitcoin, Ether, and Litecoin. On the other hand, the bill creates a new category for centralized virtual currencies. In this group we could see tokens such as Ripple, under this new categorization the heavily abused token could finally become more mainstream. Interestingly, the bill says these digital currencies can be used as a means of payment for transactions. The bill then goes on to highlight how these two groups of digital currencies can be used in the financing of terrorism and money laundering – defining the boundaries of what is acceptable and what isn’t.
Crypto Activities Clearly Outlined
The new Polish bills state that both individual and businesses who trade on a crypto exchange can be done so tax free. However, if the cryptocurrency exchanges hands in the form of a business transaction – such as buying tickets to see Beyoncé – then tax is applied at the same rate as if it was a fiat transaction.
Crypto Miners Joining the Party
Crypto miners are usually ignored by new bills and legislation. In China – amidst the current crypto crackdown – its mining companies that seem to be largely left alone, Bitmain is even launching an IPO. The new Polish bills, however, include crypto miners. Those who mine personally will not be taxed on their earnings, but those working for larger organizations – and the organizations themselves – will be taxed at the same tax levels that they would if operating in fiat.
While it is great to see individual miners being given a nice tax break on crypto mining, there is a good chance that there aren’t many left. In an exclusive interview with BitStarz News Andrew Kiguel – co-founder and CEO of Hut 8 Mining – said that going out and buying a crypto miner on your own is the most foolish thing you can do.
This is a full change in direction from the Polish government. Back in February, the government launched an anti-crypto campaign across Polish TV, targeted at Polish citizens on social media. This was then followed up in June by Polish banks denying services to those involved in cryptos. It appears as if Poland has learned its lesson and is taking a leaf out of Malta’s book by welcoming the crypto industry with open arms. Clear taxation rules are desperately needed around the world, so it is great to see nations finally implementing them.