Tax Investigations Commenced On Crypto Exchanges By Bulgaria
The Bulgarian Government has commenced investigation on crypto exchanges to demand taxes from the profits investors generated from trading digital assets.
The National Revenue Agency (NRA) has categorized cryptocurrencies as financial assets, which incur a 10 percent tax on profit that individuals have to disclose annually.
Just like Japan, the main problem with the NRA’s regulation of cryptocurrencies using the same policies used to govern existing investment vehicles is that it does not take into account the wild volatility of the crypto asset class.
Cryptocurrencies are still at their early stage and dominant digital assets like Bitcoin and Ethereum still demonstrate daily moves in the range of 5 to 15 percent.
This follows that if an investor in Bulgaria is required to declare profits on taxes on an annual basis before cryptocurrency holdings are cashed out, a substantial loss in the following year could result in a negative return for the investor.
Bulgarian authorities also consider crypto assets to be anonymous and have said that it is easy for investors to evade taxes in the crypto market.
But crypto assets by nature are not anonymous. The public blockchain network utilized by Bitcoin, Ethereum, and other major crypto assets allow anyone on the network to track transactions and wallets.