Crypto exchangesin the United Kingdom will now be subjected to a 2% digital services tax. The U.K.’s tax agency has claimed that since cryptocurrencies are not currencies or commodities, they are not exempt from the tax reserved for the giants such as Facebook and Google. Several countries across countries are actively working on crypto regulations.
Digital services tax was introduced to target large multi-national enterprises.
The digital services tax was introduced in April 2020 by the U.K. government to target “large multi-national enterprises with revenue derived from the provision of a social media platform, a search engine or an online marketplace to U.K. users.” It has targeted global giants such as Facebook, Twitter, Amazon, and Google. The tax law will now apply to cryptocurrency exchanges, London-based newspaper Telegraph reports. Her Majesty’s Revenue and Customs (HMRC), the country’s tax agency, has informed exchanges that they will be subject to the tax going forward.
HMRC says cryptocurrencies are not financial instruments and don’t qualify as commodities or money.
HMRC says that digital currencies are not financial instruments and don’t qualify as commodities or money. As such, exchanges that offer them are not eligible for an exemption that’s offered to financial marketplaces. “There are a wide variety of crypto assets, each with different characteristics. It is unlikely that crypto-asset exchanges can benefit from the exemption for online financial marketplaces,” the agency stated in an update to its taxation guidelines. The digital services tax imposes a 2% levy on online platforms, which will now include the exchanges, whose global revenue exceeds over $665 million and U.K. sales exceed $33 million.