Recent administrations in Korea have greatly emphasized the importance of decentralization and autonomous local governments. However, numerous efforts on decentralization have not been accompanied by adequate level of fiscal decentralization. Some critiques have long claimed that local governments are not equipped with enough financial independence or autonomy to deliver preferred services. Some others have challenged this claim, accusing local governments on potential waste of financial resources and local administration capacities, with no significant improvement in public service performance. This research analyzes fiscal decentralization in terms of taxation and expenditure. It empirically investigates whether decentralized taxation and decentralized expenditure affect public service performance in Korean local governments. Based on an assortment of data on local government finance and public service performance, the analysis shows that decentralized taxation and decentralized expenditure have positive effects on a local government performance when either one of them was included in the model. In contrast, in the research model that included both variables, the effect of decentralized taxation on the government performance was not statistically significant. Meanwhile, the positive effect of decentralized expenditure was statistically significant. Results show that decentralized expenditure does not necessarily hinder local government performance, contrary to many concerns. It is advised that administrations in Korea emphasize decentralized expenditure more than decentralized taxation. Decentralized expenditure does not hinder local government performance, and thus the government should continue to promote it to resolve imbalances across local governments.
Cryptocurrencies are a modern phenomenon not only in terms of technological progress, but also as a means of payment or investment. The aim of the diploma thesis is to evaluate the impact of dealing with cryptocurrencies in terms of the tax burden for a particular entity. Personal and corporate income tax and value added tax are collected to assess the tax burden. The analysis is supplemented by recommendations for optimizing the tax liability and a list of consequences for non-declaration of income from cryptocurrencies. The conclusion summarizes the results of the work, including legislatively unresolved issues of further taxation.
The new European regulatory framework for crypto-assets contains strict reporting requirements for EU-based crypto service providers, which will give tax authorities and law enforcement agencies better insights into a significant segment of the cryptoasset space. The article first outlines how this will inevitably lead to the creation of a parallel crypto-asset market focused on offline wallets and peer-to-peer services outside the supervision of EU and national tax authorities. The article then highlights the important role that the so-called Central Bank Digital Currencies (CBDCs) will play in this environment. The differences between CBDCs and crypto-assets are examined from a tax assessment perspective in order to show that true anonymity is considerably less of an issue with (price stable) CBDCs than with (volatile) crypto-assets. The authors argue that a truly anonymous digital euro wallet for small transactions on the consumer side could not only allow the effective monitoring of businesses, but would actually increase tax compliance. If consumers have access to an anonymous cash-equivalent digital means of payment, they will be less likely to use cash or virtual currency. This in turn will cause a significant increase in available transaction data, while simultaneously granting a much better protection of taxpayers’ rights to privacy in the EU. cryptocurrency, crypto-asset, AML, taxation, CBDC, digital euro, privacy, taxpayer rights, tax assessment, wallet, reporting standards
Cryptocurrencies have long captured the attention of the financial world, revolutionizing how the world does business by providing virtually costless transactions. More recently, however, a new digital token has taken its place on the world stage. Known as NFTs, non-fungible tokens have allowed for the reinvention of modern finance infrastructure consisting of sophisticated trading and loaning systems for different asset types. Despite cryptocurrencies’ and NFTs’ novelty and popularity, they are not immune to the U.S. Tax Code. The Internal Revenue Service (IRS) has provided guidance on the tax framework of cryptocurrencies, but the taxation of NFTs is still relatively unclear, leaving taxpayers to rely largely on the cryptocurrency tax framework to address NFT taxation. The cryptocurrency framework, however, does not fully address all issues that may arise in NFT taxation. Virtual currencies have drawn much excitement, sparking the popularity of cryptocurrencies and NFT investors but have also drawn the scrutiny and worry of tax regulators. The U.S. has been experiencing a significant tax gap between the money taxpayers make from the transactions of these crypto assets and the amount of taxes paid to the IRS. Specifically, to blame for this tax gap are the novelty of these crypto assets, their inherent anonymity, their cross-border nature, and their independence from governmental or financial institutions. This article discusses the taxation of cryptocurrencies, its influence on a potential NFT-specific tax framework, why crypto assets are the weapon of choice for tax evaders, and the possible solutions the U.S. can pursue to remedy crypto asset tax evasion.
This article explores the complexities of calculating tax liability for participants in decentralized finance (DeFi) transactions. It examines the unique characteristics of DeFi, including anonymity, automation, and rapid asset movement, that complicate traditional tax reporting. This article analyzes current regulatory guidance and identifies gaps in existing tax frameworks. This article also considers strategies for ensuring compliance while accounting for the innovative nature of DeFi platforms. This article concludes that a nuanced, adaptable approach is necessary to fairly and accurately assess tax obligations in the decentralized financial ecosystem.
Lin William Cong, Wayne R. Landsman, Edward L. Maydew, Daniel Rabetti
We describe the landscape of taxation in the crypto markets, especially that concerning U.S. taxpayers, and examine how recent increases in tax scrutiny have led to changes in trading behavior by crypto traders. We predict under a simple theoretical framework and then empirically document that increased tax scrutiny leads crypto investors to utilize legal tax planning with taxloss harvesting as an alternative to non-compliance. In particular, domestic traders increase taxloss harvesting following the increase in tax scrutiny, and U.S. exchanges exhibit a significantly greater amount of wash trading. Additional findings suggest that broad-based and targeted changes in tax scrutiny can differentially affect crypto traders' preference for U.S.-based exchanges. We also discuss other gray areas for tax regulation related to new crypto assets such as Non-Fungible Tokens and Decentralized Finance protocols that further highlight the importance of coordinating tax policy and other regulations.
Tax is assessed and paid in the legal tender in which the transaction was conducted. A legal tender is a fiat currency centrally issued by the government through its Central Bank and is legally declared and designated as money to meet all kinds financial obligations including payment of taxes and debts within the boundary of a particular country. However, advancements in technology led to the emergence of virtual medium of payment such as ‘cryptocurrency’ which do not enjoy legal tender status like fiat currency. Over the past decade, there has been an increased number of transactions in Nigeria where cryptocurrency was the means of payment. This raises the question as to how such transactions will be assessed to tax bearing in mind that tax can only be assessed and paid in the currency in which the transaction was conducted. In addition, the virtual nature of cryptocurrency creates opportunities for tax avoidance thereby constituting a serious tax challenge for a developing country such as Nigeria. It therefore becomes necessary to address the taxation of cryptocurrency transactions to prevent tax avoidance that can arise therefrom. This objective of this article is toexamine the nature and the legal status of cryptocurrency. The article will also examine the tax treatment of cryptocurrency in some selected tax jurisdictions as well as the tax challenges posed by cryptocurrency transactions.
DAC8 could be a quick fix to cryptocurrency tax evasion. In an ecosystem where pseudo-anonymity is the rule, however, taxpayers are difficult to identify. Unless information can be obtained that links the virtual and real identities of taxpayers, taxation is impossible and even the best thought-out tax rules will be limited in scope. This article, after establishing the cryptocurrency playing field, addresses the limitations of cryptocurrency tax compliance, with an emphasis on the European Union.
In this note, the authors discuss the practical issues beneficial owners holding portfolio investments and financial intermediaries providing services face when making treaty claims, the latest developments on this from a national and international perspective, and how new innovative technology may be the way to resolve these issues.
Christine R. Martell, Tima T. Moldogaziev, Salvador Espinosa
Abstract This book argues that capital markets can be an important source of financing for subnational governments across the globe as they face decentralization of governance systems and increased demand for infrastructure at the local level. The central argument is that information resolution at both the national-level and the city-level is critical for the success of subnational capital markets. Furthermore, the chapter argues that subnational governments can and must become competent actors with regards to both top-down (national to local governments) and outside-in (financial sector firms to local governments) transactions and pressures. This chapter presents city policymakers with options for capital market access when both system credit contractibility and underlying credit quality vary by offering a typology of alternatives for capital financing. The chapter recommends policies that establish contractibility and credit quality assessment mechanisms and concludes with recommendations for future research.
O presente trabalho tem como objetivo demonstrar a origem e a formação de criptomoedas, compreendendo a natureza material dessa tecnologia em detalhes, será possível categorizá-la em um fator de incidência tributária adequado, pois apenas compreendendo o objeto da tributação, em sua essência, será possível classificá-lo com menores riscos de incorrer em erro, aplicando o imposto mais adequado ao caso específico. Consequentemente, serão apresentadas a criptomoeda e suas possíveis classificações na ordem jurídica, a fim de entendê-la como um bem ou como um ativo de mercado, ou seja, uma própria moeda. Essa classificação é fundamental para que seja possível determinar como a incidência tributária será dada na moeda virtual e, é claro, permitir a aplicação da regra da matriz tributária a ela. Além disso, nesta pesquisa será trabalhada, em um primeiro momento, a constituição existencial da criptomoeda, além de uma explicação tributária sobre os fatores de incidência que podem ser aplicados a essa tecnologia, buscando entender a essência tanto no amplo escopo jurídico e na própria tributação. Dessa forma, será necessário analisar a moeda virtual de maneira semelhante a outros ativos que possuem operações fechadas, bem como verificar o entendimento internacional sobre o assunto, uma vez que essa tecnologia é definitivamente um ativo internacional.
ABSTRACT To protect the privacy and other civil liberties of citizens, federal courts place limits on the power and actions of government. These limits create a need for balance between the IRS' mission of tax law enforcement and taxpayers' privacy rights. A much-watched contemporary lower court case intersecting cryptocurrencies, summons power, and taxpayer privacy is Coinbase v. U.S. There, the IRS sought to summons massive amounts of customer information from Coinbase, a cryptocurrency exchange platform. This article examines the history of the IRS summons power and argues that the Coinbase court correctly extended a wealth of summons enforcement case law by weighing the protection of taxpayer privacy with the tax compliance mission of the IRS. By allowing the IRS summons to stand, but limiting and defining the scope of relevant records allowed to be examined, the Coinbase court correctly balanced IRS tax enforcement with taxpayer data privacy.
Outlines key principles of fiscal decentralization, as drawn from the academic literature, including: (1) the rationale for devolving service provision and financing responsibilities to subnational governments; (2) guidelines for assigning particular expenditures and revenues across levels of government; and (3) a framework for designing and allocating intergovernmental transfers. The decentralization of responsibility for the provision and financing of services from central governments to subnational governments remains a pervasive phenomenon in developing and transition countries. In theory, decentralization results in a better match between subnational public service delivery and diverse citizen preferences. The most commonly stated objectives for intergovernmental transfers include adequacy, equity, efficiency, and performance. In general, individual types of grants require matching with objectives. The impact of intergovernmental fiscal transfers on subnational education spending depends, in theory, on the type of transfer. Conditional transfers have a larger effect on education spending than general transfers, because subnational governments must spend targeted conditional transfers in the education sector.
Purpose This paper aims to study the impact of municipalities’ own resources on their investments‘ expenditure. Design/methodology/approach Panel data analysis. A sample of 34 municipalities in Benin. Econometrics tests for the panel data models – estimation of the fixed-effect and random-effect models. Hausman test to identify the best model to explain the impact of the explanatory variables on local investments’ expenditures. Heteroskedasticity, normality and autocorrelation tests. Findings The results establish a positive and significant impact of own resources, state transfers and demographic variables on local investments’ expenses. Research limitations/implications As an implication, the results show the importance of local resources’ mobilization for the municipalities’ investment capacity building. They also show that the central government transfers continue to play a major place in local investments’ finance, even in a decentralization context. Limitation: Available data do not allow to well evaluate the impact of the electoral variable on municipalities’ investments’ expenditure. This situation does not allow to well analyze the public choice considerations in local authorities’ behaviors. Practical implications Local mobilization of financial resources must be encouraged to raise municipalities’ investments’ capacities. Strategies must be developed to reinforce local capacities in local resources mobilization. Social implications The results show the importance of local resources in local investments. They show the importance of citizens’ participation in their well-being construction, through local resource mobilization (ex: local fiscality). Originality/value Many authors assert in the literature that financial autonomy has a real impact on local development. However, empirically, it was not demonstrated. This paper contributes to correct this lack.
ABSTRACT: The treatment of virtual currencies when it comes to income tax differs as much as the definitions of virtual currencies from country to country. It depends on this definition whether the existing laws corresponding to income tax can also include virtual currencies. Most commonly, virtual currencies fall under a certain category of income and thus are taxed accordingly. Many states have also published clarifying documents on how virtual currencies fit for tax purposes and how the existing legislative framework applies to them. Very few states consider cryptocurrencies as another type of currency, complementary to the usual one, whether we are talking about domestic or foreign markets, thus including them for tax purposes. KEY WORDS: Tax system, Cryptocurrencies, legislation, regulation
Blockchain technology, perhaps the most revolutionary invention of the 21st century, was popularized by introducing the world's first cryptocurrency 'Bitcoin.' However, despite many purported advantages offered by cryptocurrencies, they eluded mass adoption due to their extreme volatility. This flaw led to the ideation of an alternate cryptocurrency, 'stablecoin' which have seen their popularity surge almost 10x within a year. Further, the world has also witnessed the evolution of new business structures in decentralized autonomous organizations ('DAOs') where ownership and management intermingle with the help of smart contracts driven blockchain technology.
The profoundness of these new-age concepts could see them become the inherent elements of the global economy soon. This development would also necessitate devising new tax policies to cater to the crypto and blockchain-driven world. So far, not much has been discussed or debated around the income-tax implications for these concepts. With this background, the authors have deep-dived into the concept of stablecoins, their mechanics and explored the possible income tax implications throughout the lifecycle of different stablecoins. The authors have also discussed the concept of DAO along with a real-world case study, examine conceivable income tax offshoots that could arise due to DAO's unique nature, and sign-off with a suggestion on the probable solution.
This Opinion Statement, submitted to the EU Commission Platform for Tax Good Governance on 11 January 2021, provides the CFE’s input on the questions of the EU Platform for Good Governance on Extending the EU Mutual Assistance Directive (2011/16) (DAC) Council Directive 2011/16/EU of 15 February 2011 on Administrative Cooperation in the Field of Taxation and Repealing Directive 77/799/EEC, OJ L 64 (2011), Primary Sources IBFD. to include cryptoassets and e-money.
A game between a representative household and a government was analyzed. The household chose which fractions of two currencies to hold, e.g., a national currency such as a Central Bank Digital Currency (CBDC) and a global currency such as Bitcoin or Facebook’s Diem, and chose the tax evasion probability for each currency. The government chose, for each currency, the probability of detecting and prosecuting tax evasion, the tax rate, and the penalty factor imposed on the household when tax evasion was successfully detected and prosecuted. The household′s fraction of the national currency, the government’s monitoring probability of the national currency, and the penalty factor imposed on the global currency, increased in the household′s Cobb Douglas output elasticity for the national currency. The household′s probabilities of tax evasion on both currencies increased in the government’s Cobb Douglas output elasticity for the national currency. The government’s taxation on both currencies decreased in the output elasticity for the national currency. High output elasticity for the national currency eventually induced the government to tax that currency more than the global currency. The household′s probability of tax evasion on the global currency increased in the government’s output elasticity for that currency. The household was less (more) likely to tax evade on the national (global) currency if the government valued taxation and penalty on the national (global) currency. The results are illustrated numerically where each of the eight parameter values was varied relative to a benchmark.
Один из принципов классической предвыборной борьбы - это соревнование идей и методов распределения общественных благ, получаемых за счёт налогов и сами ставки налогов. При этом немаловажно не только умение создать и поддерживать оптимальную систему сбора и распределения налогов, но и максимально доходчиво предоставлять обществу открытую информацию о происходящих в этом деле процессах и перспективах. И чем более демократичнее общество, тем больше такое понимание им востребовано. Новые технологии блокчейна и криптовалют в частности, дают возможность создать улучшенные системы как сбора и распределения информации, так и удобного привлечения общественного контроля. И чем раньше страны примут его к массовому применению, тем успешнее будут их экономики. One of the principles of the classic election campaign is the competition of ideas and methods of distribution of public goods obtained from taxes and the tax rates themselves. At the same time, it is important not only to be able to create and maintain an optimal system for collecting and distributing taxes, but also to provide the public with open information about the processes and prospects taking place in this matter as clearly as possible. And the more democratic a society is, the more such an understanding is in demand. New technologies of blockchain and cryptocurrencies, in particular, make it possible to create improved systems for both collecting and distributing information, and conveniently involving public control. And the sooner countries adopt it for mass use, the more successful their economies will be.