Costa Rica wants “crypto” taxes removed as it looks to transform into a digital asset center
Costa Rican lawmakers are taking action to transform the country into a digital currency haven. The key piece of the puzzle is to eliminate all taxes on digital assets including BTC.
The plan to remove taxes was contained in a bill presented to the congress by Johana Obando. Titled the Cryptoassets Market Law (MECA), Obando notes that the incoming legislation will “provide protection to individual virtual private property, to self-storage of cryptoassets and decentralization.”
“Tomorrow I will present a bill to provide legal certainty to Fintech and similar companies in Costa Rica to promote the digital economy and the use of crypto-assets,” Obando wrote on Twitter.
She notes that if passed into law, MECA would allow digital assets to thrive without major distortions by the central bank, but would exist in “perfect harmony.” The content of the regulation clearly defines what constitutes a virtual currency and will prevent the authorities from imposing taxes on them.
The tax regime proposed in the bill would protect investors from paying tax when digital assets are used to pay for goods and services and would also insulate investors with assets in cold storage. Miners appear to be covered by the bill as assets mined in the country will not be taxable.
However, profits from investment and trading in digital assets will be subject to income tax under the bill. The bill has received support from congressmen Luis Diego Vargas and Jorge Dengo, but the nature of the legislation’s opposition remains unclear.
Digital asset taxation worldwide
The move to eliminate taxation for virtual assets has been interpreted as one that could bring the country closer to the path of El Salvador which elevated BTC to legal tender.
Virtual currency taxation has undergone a bumpy ride in different jurisdictions around the world. In some regions, the tax regime is relaxed, while others have adopted rigid rules to reduce the level of interest for virtual assets.
One of the countries with the toughest tax policy for digital currencies is India. The Indian finance minister imposed 30% tax, a current surcharge and 4% on realized profits, while Portugal, one of the countries with near-zero tax, is considering imposing levies on the industry.
In the US and the EU, the convention is that tax must be paid on gains from investment or trading in digital assets upon sale.
See: BSV Global Blockchain Convention panel, Blockchain for Digital Transformation of Nations
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