Russia is afraid that cryptocurrencies could erode the profits on taxation, while El Salvador’s Bitcoin City is set to operate on zero tax.
Russia Fears Crypto Could Erode Tax Profits
Daniil Egorov, head of Russia’s Federal Tax Service, has made his opinions known about cryptocurrencies. The country’s top taxman said that cryptocurrencies could be used to evade taxes, and that would erode the profits on taxation.
In a recent interview, Egorov stated that “We are watching this market closely and understand that this payment system can significantly erode the taxation base.” He added that the tax authority would approach the problem in a systematic way but didn’t provide specific details.
Furthermore, Egorov added that the Federal Tax Service has been using blockchain technology to store electronic power of attorney letters. However, the chief taxman did not provide any further details.
Cryptocurrencies are recognized as taxable assets in Russia, and the law has provided in-depth details regarding how cryptocurrencies should be taxed.
El Salvador’s Bitcoin City to Operate Tax-Free
While Russia is afraid that cryptocurrencies would be used to evade taxes, El Salvador’s new Bitcoin City is set to operate tax-free. According to the latest report, the Bitcoin City will boast 0% taxes across income, capital gains, property, payroll, municipal and CO2 emissions.
El Salvador remains the most progressive country in the world in terms of cryptocurrencies. It is the first and only country to make Bitcoin a legal tender, and the government has made numerous moves to ensure that crypto investors thrive in El Salvador.
The El Salvador government is a big believer in cryptocurrencies and blockchain technology and their impacts on the future of the global economy. The cryptocurrency market has underperformed in recent weeks, and Bitcoin has dropped below the $57k level for the first time in weeks.
The bearish trend could continue for a while unless the bulls regain control of the broader market.