The government of Australia has vowed to exempt digital currencies, such as bitcoin, from double taxation.
In a recently released policy statement, the Australian Government Treasury said it plans to make a country as a fintech destination first by reducing tax barriers for fintech investment, and then by curbing the existing goods-and-services tax (GST) levied on virtual currencies.
“The government recognizes that that the current treatment of digital currency under GST law means that consumers are ‘double taxed’ when using digital currency to buy anything already subject to GST,” the government said in a statement.
Currently, there are more than 600 digital currencies around the world, each “with different protocols for transaction processing and confirmation.”
The government has yet to identify the specific measures that it will put in place in connection with digital currencies, but Australian Treasurer Scott Morrison assured the Australian Financial Review that they will “take action to prevent the double taxation of digital currencies—we won’t be taxing digital currencies.”
Treasury officials noted the government has been working with the Australian Securities and Investments Commission (ASIC) to develop a “regulatory sandbox” that will help fintech startups.
“We need a regulatory environment that provides consumers with confidence while not unnecessarily restricting the opportunities for innovation,” the treasury stated.
In Japan, financial regulators are also weighing on a proposal that will see digital currencies treated as real money. Liberal Democratic Party legislator Tsukasa Akimoto proposed last month that bitcoins purchased should be exempt from an 8 percent consumption tax. Critics, however, believed that the 8 percent consumption tax rate will sap people’s eagerness to use digital currency.
Japan is currently the only member of the Group of Seven industrialized nations that taxes bitcoins.
Last year, the European Court of Justice declared that exchanges of bitcoins and other digital currencies are to be treated like traditional money such as bank notes and coins, and are thus exempted from value added tax.