Virtual Currency, Digital Currency, Crypto Asset, DLT(Distributed Ledger Technology) , Payment tokens, Virtual Asset, Bitcoin are some of the terms commonly used to denote the crypto currency without any standard common definition. These are all types of crypto assets developed initially in 2009. Bitcoin, Ethereum are some of the widely used crypto currencies. All around the world some countries have regularised this field, some are yet to regularise. The entire event is based on the concept of decentralisation or no need of a Central organ to control or monitor such currencies. The various articles published with different ideas regarding the taxability of such cryptocurrencies are analysed .
In order to ensure clarity, it is imperative that tax legislation regarding non-fungible tokens (NFTs) in Indonesia incorporates considerations of assessment values, collection procedures, and technical advancements. This would facilitate the seamless integration of NFTs into the country's economic system, while awaiting prompt government action. Discussions concerning legal protection for NFTs, particularly in the context of tax law, remain limited, with an emphasis on existing research pertaining to copyright law and intellectual property rights. The aim of this study is to scrutinize the legal protection of NFTs, specifically in relation to tax law, with the intention of providing a comprehensive understanding of NFTs within Indonesia's legal framework. This study employs a normative juridical research methodology to evaluate the legal protections afforded to NFT artworks, as well as the associated aspects of taxation. The normative juridical approach is an analytical strategy that scrutinizes legal norms and established legal concepts. The study utilizes a combination of primary and secondary legal sources, which are subsequently subjected to thorough analysis and assessment. The analysis reveals that there are currently no tax liabilities associated with NFTs in Indonesia. Consequently, due to the absence of tax legislation, there is a lack of regulations governing the taxation of NFTs and other cryptocurrencies. Evading taxes could potentially result in a decline in government revenue from the informal sector. Therefore, stringent oversight and judicious regulation are essential for establishing a transparent and equitable legal framework for NFTs and cryptocurrencies in Indonesia.
This paper aims to provide a comprehensive review of the integration of artificial intelligence (AI) and blockchain technology in U.S. tax administration. It explores how these technologies are revolutionizing tax compliance and fraud detection, offering a comparative analysis with traditional methods. The paper highlights the potential benefits of these technologies in enhancing efficiency, accuracy, and transparency in tax administration, aligning with the U.S. government's objectives of ensuring fiscal integrity and public trust. The review also examines international best practices and proposes how the U.S. can leverage these technologies to maintain its global leadership in financial governance and innovation. The study is structured around four key objectives: assessing the current integration of AI and blockchain in tax administration, evaluating their effectiveness in enhancing tax compliance, identifying implementation challenges, and developing strategic recommendations. Employing a comprehensive literature review approach, the study synthesizes findings from various sources to provide an in-depth understanding of the role and impact of these technologies in modern tax systems. The results reveal that AI and blockchain significantly improve tax compliance and administration efficiency but also introduce challenges such as data privacy concerns and the need for robust regulatory frameworks. In conclusion, the study underscores the transformative potential of AI and blockchain in tax administration, recommending continuous research and development, coupled with stakeholder education and engagement. These efforts are crucial for overcoming operational challenges and fully harnessing the benefits of these technologies in modernizing tax systems. The paper concludes with strategic recommendations for policymakers, tax authorities, and researchers, emphasizing the importance of a balanced approach that fosters technological innovation while maintaining legal compliance and adherence to fundamental principles. Keywords: Artificial Intelligence, Blockchain, Tax Administration, Tax Compliance, Digital Transformation, Financial Governance.
Article Der Geschäftsvorfall „Herausgabe eines Non-Fungible Token (NFT) gegen Rechteeinräumung“ aus dem Blickwinkel der Umsatzsteuer was published on February 1, 2024 in the journal UmsatzsteuerRundschau (volume 73, issue 3).
Although tax authorities are increasingly moving to digitalisation, there has been limited use of blockchain for assisting tax administration and compliance. This article discusses the potential use of blockchain technology for this purpose. In particular, the Australian tax system is considered in light of the challenges identified in the recent official report published by the House of Representatives Standing Committee on Tax and Revenue. These challenges result from the rising gig economy, complex work-related deduction rules for individual taxpayers and, more generally, tax evasion in the cash economy. To overcome these challenges, this article proposes a blockchain solution that increases taxpayer engagement with the tax and superannuation system. Not only would this solution benefit the Australian Government's ability to raise revenue and induce a good compliance culture, but a similar solution could be adopted in other jurisdictions.
Cryptocurrencies pose substantial challenges to tax enforcement due to their anonymous and decentralized properties, undermining conventional regulatory practices. We study the impact of an ambitious new enforcement initiative aimed at addressing these challenges: domestic third-party reporting of crypto income. We estimate tax compliance and behavioral responses to this new policy by combining unique Danish microdata from domestic crypto platforms, administrative tax records, and cross-border bank transfers. Despite the introduction of domestic third-party reporting, over 90% of crypto investors do not declare crypto income. Moreover, we identify a significant and persistent evasion response to the policy as investors shift trading activity from domestic platforms, subject to third-party reporting, to foreign platforms outside regulatory reach. Our findings underscore the limits of domestic enforcement strategies in addressing tax evasion for decentralized, borderless assets like cryptocurrencies, highlighting the need for international coordination.
[SPA] El objetivo perseguido con este trabajo fin de grado pretende abordar y analizar el tema del control tributario de las criptomonedas intentando así esclarecer y dar un poco de visibilidad sobre este tema. En los últimos años ha crecido de manera exponencial, atrayendo así la atención de inversores, reguladores y autoridades fiscales. Los dos primeros puntos del trabajo los usaré de forma introductoria para así poder tratar conceptos básicos para así poder sumergirnos de la manera más optima en el mundo del control tributario y de las criptomonedas, explicándose temas como: qué es y el por qué de la importancia del control tributario, que es una criptomoneda, bitcoin y un Exchange. Seguido del tema del control y vigilancia tributaria en España hablando así de las limitaciones que esté presenta seguido del sistema y organismos que se encargan de este control tributario continuando con una breve mención sobre la ley MICA. Los siguientes tres puntos son la parte más densa e importante del trabajo tratando temas muy relevantes como: la tributación fiscal de diversos impuestos adaptados a la posesión de criptomonedas, seguido de las obligaciones de los contribuyentes donde se mencionaran algunos de los nuevos modelos fiscales junto a las sanciones que estos usuarios poseedores de criptomonedas pueden llegar a tener si no cumplen correctamente sus obligaciones fiscales, y finalmente de los retos y desafíos del control tributario, que consistirá en una breve mención del por qué de la importancia actual de las criptomonedas junto a los problemas que estas causan en la actualidad. Finalmente llegamos al punto de la conclusión en el que se expondrá y reflexionará sobre todo lo aprendido a lo largo de la investigación de este Trabajo Fin de Grado junto a posibles escenarios futuros del desarrollo de la fiscalidad de las criptomonedas. [ENG] The aim of this final degree project is to address and analyse the issue of the tax control of cryptocurrencies in an attempt to clarify and give some visibility to this topic, as it is a very current issue, but at the same time quite unknown. In recent years it has experienced exponential growth, attracting the attention of investors, regulators and tax authorities. I will use the first two points of the paper as an introduction to deal with basic concepts in order to immerse ourselves in the most optimal way in the world of tax control and cryptocurrencies, explaining topics such as: what is tax control and why is it important, what is a cryptocurrency, bitcoin and an exchange. Followed by the topic of tax control and surveillance in Spain and the limitations that this presents followed by the system and agencies that are responsible for this tax control followed by a brief mention of the MICA law. The next three points are the most dense and important part of the work, dealing with very relevant issues such as the taxation of various taxes adapted to the possession of cryptocurrencies, followed by the obligations of taxpayers where some of the new tax models will be mentioned along with the penalties that these users holding cryptocurrencies may face if they do not comply correctly with their tax obligations, followed finally by the challenges and challenges of tax control, which will consist of a brief mention of why the current importance of cryptocurrencies together with the problems that they cause at present. Finally, we come to the point of the conclusions in which we will present and reflect on everything we have learned throughout the research of this Final Degree Project together with possible future scenarios for the development of the taxation of cryptocurrencies.
In recent years, the circulation of Non-fungible tokens related to works of art has become particularly important due to the frequency of transfers and their economic significance. The contribution aims to analyse some of the main profiles in the regulation of VAT and income tax and in the light of the new frontiers of international administrative cooperation.
This study examines the implementation of the NFT phenomenon and how legal protection and tax enforcement are for NFTs.Non-Fungible Tokens or NFTs are digital assets that can be traded with cryptocurrencies, NFT assets themselves consist of digital art, music, moving images (GIFs), videos and several other digital assets.This study uses a normative juridical research method with a statutory approach, which in this paper analyzes how legal protection is in laws and regulations for works of non-fungible tokens (NFT) and examines the taxation of NFTs.This study obtained the result that thereis no legal regulations regarding the existence of NFTs in Indonesia, which aims to create guarantees of protection and legal certainty.In addition, NFT does not yet have tax law provisions, therefore it is necessary to formulate these NFT tax law provisions.
Decentralized Finance (DeFi) represents an emerging sector within the cryptocurrency space. DeFi is currently one of the most groundbreaking and disruptive technologies impacting upon the centralized finance systems, bringing with it many distinctive features and huge potential. In this chapter, we present stylized facts on DeFi and shed light on the broader empirical features of market efficiency, volatility clustering, leverage effects, and the return volume relationship of this market.
The advent of decentralized finance (DeFi) has instigated a paradigm shift in finance and economics, challenging the established norms of traditional network economics. This research offers a comprehensive comparative analysis of DeFi's impact on market power, pricing dynamics, and user adoption, juxtaposed against traditional centralized financial systems. Utilizing advanced analytical methodologies, the study reveals significant findings in the redistribution of market power, the evolution of pricing models, and the shifting landscape of financial service consumers. Central to this study is the investigation of how DeFi platforms, characterized by their decentralization, are reshaping market power dynamics. Traditional financial networks, often dominated by central entities (Nakamoto, 2008), are witnessing a gradual erosion of these centralized powers in favor of a more equitable distribution through DeFi systems (Schär, 2021). This redistribution represents a tangible shift in the power dynamics of financial markets, driven by the unique structure of DeFi. Additionally, the research explores the differences in pricing models between DeFi and traditional finance. It uncovers a novel pricing mechanism within DeFi that starkly contrasts with traditional methods, influencing asset valuation and market volatility (Gorton & Zhang, 2020). This distinct pricing approach in DeFi has the potential to significantly alter the global financial market landscape. Furthermore, the study examines user adoption patterns, highlighting a swift uptake of DeFi, especially in emerging economies (Catalini & Gans, 2020). This trend not only challenges existing financial models but also sheds light on the demographic and psychographic variances between DeFi and traditional finance users (Auer & Claessens, 2020; Biais et al., 2019). This research provides a foundational understanding of DeFi's implications on traditional network economics, paving the way for further studies and informing policy development. It is a vital resource for policymakers and financial institutions navigating the evolving financial service industry.
Abstract DeFi blockchain technology, known as decentralized finance today, separates from the traditional financial ecosystem and ushers the new financial landscape onto digital platforms. In decentralized financial applications, all digital assets are safeguarded by blockchain technology. Thanks to this technology, investors can transfer their financial assets without being dependent on banking authorities. Despite the numerous advantages they bring, financial assets based on the decentralized finance ecosystem come with certain disadvantages. These assets are difficult to control, easily manipulated, and are at risk due to their vulnerability to cyberattacks. This study conducted bibliometric analyses on a total of 930 publications registered in the Web of Science (WoS) and Scopus databases using the VOSviewer program. In both databases, “all fields” were filtered and scanned with the keyword “decentralized finance.” According to the results, the Scopus database has much richer content compared to the WoS database. The most cited author in the Scopus database was Chen Y, while in the WoS database, it was Nakomoto S. There has been a significant increase in the number of publications in both databases since 2020. Additionally, it was detected that the most cited countries in both databases were the USA, China and England, respectively. It has been observed that computer science comes to the fore in the publication rankings. Decentralized finance is an interdisciplinary field of study. Therefore, many more qualified hybrid studies are needed. More studies are needed, especially examining investor behavior. The analyses presented in this article will enable researchers to grasp the bigger picture from a holistic perspective.
The exponential growth that the cryptocurrency market has seen in the past decade has caused much discomfort among governments across the globe, owing to the unregulated nature of transactions and what some may argue is a disproportionate impact of the crypto market on domestic economies. The natural response of most jurisdictions has been to tax cryptocurrency transactions so as to discourage them while also gaining revenue out of them. However, taxation policies face complex questions of determining the true nature of crypto transactions, a question that is yet to be answered with clarity. The knee-jerk reaction that the industry has attracted from the Indian government in particular has materialised in the form of imposition of a virtual digital assets tax on cryptocurrencies. The authors argue that this policy failed to effectively address its objective and only resulted in a sudden downfall of the crypto market in India, creating negative repercussions for the domestic economy. The authors then employ a game theoretical analysis to propose an alternative taxation framework that recognizes the significance of the crypto market and better balances the need for its regulation. Further, they discuss frameworks from a range of external jurisdictions to analyse the expected implications of similar policies in the Indian economy.
Local taxes with fiscal power for local authorities arte gradually being dismantled by State tax reductions which lead to the abolition of these taxes. The financing of decentralization is therefore increasingly dependent on the sharing of national tax revenues. The impossibility of local fiscal autonomy prompts a rethinking of the complex fiscal relations between the State and local authorities. The re-creation of a local fiscal power would go through consultation and co-decision between the State and the local authorities but also, in particular, with the crisis of representative democracy, through a better association of local elected representatives and citizens. However, veticality today characterizes the relationships between these actors.
Alex Berke, Tobin South, Robert Mahari, Kent Larson · 5 authors
Tax returns contain key financial information of interest to third parties: public officials are asked to share financial data for transparency, companies seek to assess the financial status of business partners, and individuals need to prove their income to landlords or to receive benefits. Tax returns also contain sensitive data such that sharing them in their entirety undermines privacy. We introduce a zero-knowledge tax disclosure system (zkTax) that allows individuals and organizations to make provable claims about select information in their tax returns without revealing additional information, which can be independently verified by third parties. The system consists of three distinct services that can be distributed: a tax authority provides tax documents signed with a public key; a Redact & Prove Service enables users to produce a redacted version of the tax documents with a zero-knowledge proof attesting the provenance of the redacted data; a Verify Service enables anyone to verify the proof. We implement a prototype with a user interface, compatible with U.S. tax forms, and demonstrate how this design could be implemented with minimal changes to existing tax infrastructure. Our system is designed to be extensible to other contexts and jurisdictions. This work provides a practical example of how distributed tools leveraging cryptography can enhance existing government or financial infrastructures, providing immediate transparency alongside privacy without system overhauls.
Decentralization holds a significant role in the context of decentralized autonomous organizations (DAOs), with its nature being not a fixed value but a comparative spectrum. Prior research investigating the measurement of decentralization in nations’ governance system provides a foundation for our current study. This research aims to integrate these insights to define dimensions and indicators, tailored explicitly for assessing decentralization levels within DAOs. Then, the article undertakes an examination of the suitability of traditional decentralization measurement approaches within the unique DAO context, employing confirmatory factor analysis (CFA) as our analytical tool based on a total of 44 DAOs. Hence, the results suggest that DAOs have three dimensions for measuring decentralization, ‘political decentralization as a participatory engagement’, ‘economic decentralization as a resource distribution’, and ‘administrative decentralization as the self-governing execution of decisions’. By substantiating the applicability of established decentralization measurement frameworks within the unique context of DAOs, the findings not only enhance the understanding of this emergent governance paradigm but also provide DAO practitioners, policymakers, and researchers with invaluable insights.