In the United Kingdom, bitcoin exchanges are being targeted for tax evasion. This happened only a few days after HMRC announced that Bitcoin exchanges could not qualify for financial services exemptions.
The UK government has now brought all existing Bitcoin exchanges within its Treasury’s technology tax. With the country’s Bitcoin exchanges facing a tax disaster, the UK tax administration has said that all online crypto exchanges would be required to pay tax as well.
For example, Amazon, Google, and Facebook are all required to pay tax to the UK Exchequer. Nevertheless, the tax decision looks to be having a significant negative impact on Bitcoin exchanges in the nation. On the one hand, this seems to be unfavorable to crypto firms seeking to provide Bitcoin services, notably in the United Kingdom.
Furthermore, since Coinbase has a company in the United Kingdom, applying the Bitcoin exchange tax presents a direct danger to it. Meanwhile, according to the source, CryptoUK is now engaged in a little struggle with the HMRC and the Treasury on claims that they are being discriminatory in their treatment of cryptocurrency compared to other financial assets.
The HMRC responded by saying that there are many digital currencies, each with its own set of characteristics. Because digital currencies are neither money, commodities, or financial contracts, digital currency asset exchanges are unlikely to qualify for the exemption for online financial markets.
Furthermore, according to Ian Taylor, head of CryptoUK, the authority’s decision is a “heavy blow” to cryptocurrency exchanges that follow the Financial Conduct Authority’s “arduous” licensing method (FCA). Furthermore, the adoption of this new tax is likely to result in excessive costs for cryptocurrency investors.