Chile must start taxing cryptocurrencies in April, when taxpayers pay annual income taxes, but it is not clear at what speed. According to local media reports, the country's tax authority has included cryptographic activities in the annual tax return form, which will be declared as "other own income and / or third party income from companies that declare their actual income ".
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Investors pay taxes on encrypted earnings
Chile has exempted cryptocurrencies from the value added tax laws in 2018, labeling them as "intangible assets", but investors will now be required to pay taxes on earnings generated by investments related to encryption, said Diario Bitcoin, quoting the country's tax collector.
It is unclear at what speed the cryptocurrency will be applied, but the individual income tax thresholds in the country are on average 39.38% during the 15 years to 2018, according to the Researcheconomics research website. Today the rate stands at 35 percent.
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Fernando Barraza, director of tax authorities, said that citizens who buy, sell or exchange virtual currencies will have to register their businesses by completing what are known as "tax-free invoices". These invoices allow the Internal Revenue Service to monitor their operations. The article stated that the Chilean government was interested in following the cryptocurrency activities following a sharp increase in their use as "valid currencies for the exchange of products and services".
Cryptocurrency of cryptocurrencies
The revenue collector's move to tax encrypted assets is widely viewed by observers as an important step towards the legitimization of trade and the use of virtual currencies in the South American country. Until now, the legal status of cryptocurrency in Chile has remained a matter of conjecture. The country does not recognize virtual currencies as bitcoins as legal tender, but they are not even banned.
However, Chilean cryptic exchanges have had ongoing battles with commercial banks in the last year, which have closed their accounts without explanation. A historic ruling by the Supreme Court of Chile in December means that banks can now legally close these accounts. In a case that opposed the state-owned Bancoestado against the Orionx digital goods trading platform, the court ruled that the bank was justified in closing the exchange accounts.
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The judges said the bank acted in accordance with the laws on money laundering and the financing of terrorism, a threat allegedly represented by decentralized cryptocurrencies resistant to censorship. The Supreme Court has stated that digital resources lack "physical manifestation" and "have no intrinsic value". He also questioned the fact that they are not controlled or issued by governments or companies.
The lawyer Fiscale Patrício Bravo, representative of the non-profit Bitcoin Chile, commented that the new tax on cryptography was an attempt by the Internal Revenue Service "to expand the tax structure as much as possible to cover all types of cryptographic assets. " Bravo, who was Speaking with the local newspaper Crypto Notidies, also noted that the tax may have been "due to the current lack of Chilean legislation of figures specifically designed for this type of tools, which makes it difficult to generate more specific articles ".
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