Georgia has exempted value-added tax (VAT) imposed on cryptocurrency transactions, becoming one of the first countries to take such a step.
According to a Bitcoin.com report, the country’s finance minister Nodar Khaduri signed the bill, which turned into a law. It came into effect at the end of June.
Discover the Barcelona Trading Conference – A Top Tier Crypto Trading Event
The authorities of different countries view digital currencies differently, and according to Georgia, “cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology.”
Khaduri clarified that the exemption of tax is only for fiat-crypto transactions. The country still recognizes Georgian lari as the only fiat and will not allow businesses or platforms to accept crypto against their services or goods. The government of the country is treating cryptocurrencies more like a foreign currency.
However, the crypto mining businesses registered within the country will have to pay VAT as per the pre-decided rates. Georgia is also home to many crypto mining facilities due to the abundance of cheap hydropower generated electricity, and this step of imposing VAT on local mining companies might drive them away to other countries.
More and more countries opting for transaction tax exemption
Singapore is also considering to exempt goods and services tax from cryptocurrency transactions for a set of digital currencies which qualifies as a “medium of exchange.” The tax agency of the country proposed it in a report, but it still has to go through the country’s lawmakers to become a law.
Proper taxation of cryptocurrencies is one of the biggest challenges for the governments of many countries. Though a handful of countries consider crypto as a legal tender, the majority of nations are looking at it as an asset and are imposing mostly capital gains tax.