Reshab AgarwalCrypto exchanges in the UK will be charged a 2% service tax that will be passed to investors. The HMRC (Her Majesty’s Revenue and Customs) has made this statement recently. The bad part is that since the tax authority has not considered digital assets as financial instruments, the exchanges are not eligible for any kind of exemptions. This is going to put a lot of strain on the exchanges as this will be yet another burden to the operating cost. Combining all that with the future ban and increasing regulations, it will be a pain to operate in the UK.
Service tax in the UK
The Digital service tax was introduced in the UK for big tech giants like Facebook and Google. And now, recently, the cryptocurrency exchanges were added under the same. This is why they will have to pay 2% to the government. And even though we all know that cryptocurrencies are digital assets, they will still not be considered under any financial products. This will not allow exchanges to take any advantage of the government’s exemptions and will have to pay full tax.
The CryptoUK body that represents the digital asset sector in Britain said that the tax is unfair. The body also warned that it will be passed on to investors and traders. Another big question and that many raised was how crypto is different from stocks and other assets in terms of the category. In fact, its executive director Ian Taylor stated that it portrays the crypto sector in a poor way.
Crypto exchanges are facing a lot of hurdles
Recently the authorities said that exchanges need to follow laws that will help in preventing money laundering. They even needed to comply with all the regulations and register with the FCA. Even though all this is necessary, it poses a barrier to the growth of the industry. The more changes and regulations that are applied to the sector, the slower it will grow. And now, in the UK, they will face yet another problem as the 2% service tax is quite a lot.
The UK has become one of the most strict regulating countries in terms of crypto. Do you think that it is fair that crypto exchanges will be charged a 2% service tax while not getting any exceptions? Let us know in the comments below. Also, if you found our content informative, do like and share it with your friends.
Also Read: Thailand government says crypto is the future.