The CryptoUK has cautioned that the United Kingdom will carry a 2% tax on cryptocurrency exchanges to investors. As per the recent modification to Her Majesty’s Revenue and Customs (HMRC) laws, digital services taxes are to be paid on cryptocurrency exchanges operating in the United Kingdom.
As per a Telegraph article, cryptocurrency exchanges in the UK will now be subjected to a 2% digital services tax. Since the UK’s HMRC does not consider digital assets investment vehicles, exchanges are not eligible for federal exemptions. As a result, the authority added cryptocurrency exchanges to the Treasury’s tech tax on Sunday. The digital services tax on revenue, targeting social networking sites and search companies like Facebook and Google, was implemented in April 2020.
The newest setback for crypto exchanges, as per the regulator, is due to the HMRC’s classification of crypto assets: “Multiple cryptocurrency assets are existent, each with its unique set of features and are unlikely to benefit from the exception for online financial markets because they do not reflect products, futures contracts, or money, as per the report.
According to CryptoUK, the levy of the trade organization representing the UK’s digital asset market is unjust and will most likely be carried on to buyers and dealers. Furthermore, according to Executive Director Ian Taylor, handling cryptocurrencies separately from other financial items such as equities or commodities is counterproductive to the crypto sector.
He continued to say that it is another setback for the business, following the Financial Conduct Authority’s (FCA) rigorous licensing procedure for exchanges. Since January, all crypto-asset firms based in the United Kingdom have been required to be registered with the FCA and adhere to the anti-money laundering legislation. In January, the FCA banned crypto futures, and in June, it issued a warning to consumers about 111 crypto companies that are yet to be registered with it.
HMRC increased its attempts to catch cryptocurrency tax evaders in April, according to Cointelegraph, and added specific requirements on data of digital asset ownership on self-assessment forms. In addition, in August 2019, the British tax authorities purportedly ordered that major crypto-asset exchanges provide over information on consumers’ activities and holdings.