As cryptocurrency gains mainstream recognition, governments worldwide are implementing tax regulations to oversee this emerging asset class. The United States Infrastructure Bill and Japan's 2017 cryptocurrency tax laws exemplify this trend. Chain News exclusively interviewed Attorney Arthur Huang to clarify common tax-related questions in Taiwan's context.
About Attorney Arthur Huang (Arthur Huang)
A lawyer and Japanese freelance translator specializing in FinTech, startups, blockchain, and cryptographic asset laws. Currently exploring the Metaverse and evolving into a Coding Lawyer.
1. Is Personal Cryptocurrency Income Taxable in Taiwan? How Is It Determined?
Attorney Huang clarifies a common misconception: the absence of specific regulations doesn’t exempt cryptocurrency from taxation.
- Regulatory Stance: Taiwanese authorities treat most cryptocurrencies as virtual commodities, except Security Token Offerings (STOs), which are classified as securities.
Tax Implications:
- Profits from trading "virtual commodities" are considered property transaction income, taxable under personal income tax after deducting acquisition costs and fees.
- Using cryptocurrencies (e.g., BTC) as payment for goods/services triggers income tax if gains are realized.
- Frequent trading may classify individuals as business operators, subjecting them to business tax if monthly sales exceed NT$40,000.
- Barter transactions (e.g., BTC for goods) are taxed based on the higher value of exchanged items/services.
2. Are Cryptocurrencies Transferred from Overseas Exchanges Taxable?
Attorney Huang explains:
- Transfers between exchanges are treated as virtual commodity movements. No tax applies unless profits are realized during the transfer.
3. Do USD Repatriated from Overseas Exchanges Qualify for Overseas Income Exemptions? (e.g., FTX USD Withdrawals)
Key considerations:
Overseas profits (e.g., converting crypto to USD) are foreign-sourced income.
- Reportable if annual overseas income exceeds NT$1M (excluding losses).
Taxability depends on Basic Income Amount thresholds:
- No tax if below NT$6.7M.
- Above NT$6.7M: Compare with general income tax; pay the higher amount.
4. Is Holding Appreciated/Depreciated Cryptocurrencies Taxable?
- Purchased Crypto: No tax on unrealized gains/losses.
Mined Crypto: Tax treatment varies:
- Some countries tax mined coins as income (market value minus costs).
- Others tax upon disposal.
- Taiwan lacks clear guidelines; consultation advised.
5. How Are Corporate Cryptocurrency Investments Taxed in Taiwan?
- Profits are subject to Corporate Income Tax.
- Foreign entities must withhold taxes upon distribution.
6. How Does Taiwan’s Cryptocurrency Tax Framework Compare Globally?
Attorney Huang suggests:
- OECD/Japan models offer reference points (e.g., Japan’s 2017 laws and recent tax reforms).
- Taiwan’s simplified classification (STO vs. non-STO) lacks nuances for mining, payroll, or token rewards.
- Future risks: Tax authorities may retroactively assess liabilities (5–7 year audit window). Proactive reporting is recommended.
FAQ Section
Q1: Must I report crypto-to-crypto trades in Taiwan?
A1: Yes if profits arise. Track costs meticulously for accurate tax reporting.
Q2: Can mining losses offset other income?
A2: Unclear under current rules. Seek expert advice for case-specific strategies.
Q3: How does Taiwan tax DeFi yield farming?
A3: No explicit guidance yet. Likely treated as miscellaneous income or capital gains.
👉 Explore compliant crypto tax strategies for tailored solutions.
Risk Disclosure: Cryptocurrency investments are volatile. Capital loss risks exist. Assess personal risk tolerance carefully.
Note: This article is for informational purposes only and does not constitute legal/tax advice.
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