The study claims that 99.5% of crypto investors did not pay taxes in 2022

Swedish crypto tax firm Divly has released a new report estimating that only 0.53% of crypto investors globally paid tax on their crypto in 2022 – but tax experts have cast doubt on the numbers and methodology.

The Divly report published on April 5 came up with the estimate after analyzing the correlation between the number of people who declared cryptocurrency in their tax returns, and the search volume for crypto tax-related keywords in various countries. It also used the number of crypto holders in each country according to Statista’s Global Cryptocurrency Report in its calculations

The report estimates that Finland has the highest percentage of crypto investors who paid the required taxes on crypto by 2022 at 4.09%, while Australia follows closely behind at 3.65% respectively.

The United States ranked 10th on the list, with an estimated 1.62%, while India, Indonesia, and the Philippines had the lowest rates of tax-paying crypto investors, with 0.07%, 0.04%, and 0.03%, respectively.

The methodology used to arrive at the estimates is questionable. The report itself qualifies the results by noting that search volume data may not accurately reflect the actual number of crypto-tax payers, as not all tax payers search for crypto-tax-related information online.

Another assumption in the methodology was that the number of searches related to crypto tax reporting did not vary between different countries. In addition, it warned that there could be a potential bias towards countries with greater internet access and more accurate search volume data.

Danny Talwar, global head of tax at crypto tax software Koinly, disputed the large proportion of crypto investors who don’t pay tax as the report suggests. He told Cointelegraph:

“It is likely that the 99.5% does not reflect countries that have specific crypto tax guidelines and strict compliance requirements such as the US, Canada, Australia and India.”

Chartered Accountant Greg Valles, a Blockchain Australia board member, also said he would not be able to “definitely say that the methodology is 100 per cent accurate.”

Both tax specialists noted the government’s data matching and monitoring efforts meant it was becoming increasingly difficult to avoid crypto taxes.

Valles said that as the government’s technology becomes more sophisticated and specialized, it will become easier to detect any non-compliance and warned that those who do not report their crypto profits now risk catching up in the years to come.

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Talwar emphasized that while the risk of non-compliance for crypto is relatively higher than other asset classes, tax authorities in many countries have processes in place to obtain data from crypto exchanges.

He added that Koinly has seen crypto tax awareness “increase significantly” among investors in these jurisdictions, with only “15% of surveyed crypto investors” unaware of their crypto tax reporting obligations.

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