MEPs call for using blockchain to fight tax evasion

MEPs passed a resolution on Tuesday calling for a better use of blockchain to fight tax evasion and for member states to coordinate more on the taxation of crypto assets.

The non-binding decision, designed by Lidia Pereira (EPP, PT), was adopted in plenary with 566 votes in favor, 7 votes against and 47 abstentions. It sets out a framework in which both the goals of using blockchain in taxation and uniform taxation of crypto-assets can be achieved. The resolution was considered in plenary on Monday.

Taxation of crypto assets

The resolution states that crypto-assets must be subject to fair, transparent and efficient taxation. However, it also encourages the authorities to consider a simplified tax treatment for occasional or small traders and small transactions.

For this, the resolution first calls on the Commission to assess the ways in which the different member states tax crypto-assets and evaluate these methods, and identify the different national policies regarding the fight against tax evasion in crypto-assets. The resolution then also requires a clear and widely accepted definition of crypto-assets and for a coherent definition of what will constitute a taxable event. Regarding the latter, the Resolution suggests that converting a crypto-asset into a fiat currency may be the more appropriate choice, and it asks the Commission to specifically consider this option, along with a more general option regarding the identification of possible taxable events. The cross-border nature of crypto-asset trading also makes it important to know where the taxable event would have taken place, the resolution adds. Finally, the resolution calls for the amendment of the directive on administrative cooperation on taxation to include crypto-assets in the framework for the exchange of information.

Leverage blockchain for better tax collection

The resolution states that national administrations must use all available instruments to facilitate effective tax collection, and it identifies blockchain as one of these instruments. Blockchain’s unique capabilities can offer a new way to automate tax collection, limit corruption and better identify ownership of tangible and intangible assets, enabling better taxation of mobile taxpayers, the resolution claims.

Efforts must be made to identify best practices for using technology to improve the tax authorities’ analytical capacity, the resolution states. It also encourages the Commission to better integrate the use of blockchain in the various forums and programs dealing with taxation and cooperation in this field. The member states should also continue work on reforming the tax authorities, namely through the modernization of the resolution.