The United Kingdom’s HM Revenue & Customs (HMRC) has required licensed cryptocurrency exchanges to pay the digital services tax at 2%. Platform users may face higher fees, CryptoUK, the self-regulatory body, warned, The Telegraph reports.
Introduced in April 2020, the digital services tax was initially aimed at social media operators, marketplaces and search engines.
“There is a wide variety of crypto assets. They do not constitute goods, financial contracts or money. For this reason, bitcoin exchanges are unlikely to be able to benefit from the exemption available to online financial marketplaces,” the regulator explained.
CryptoUK said HMRC’s actions were unfair and pointed to the risk of shifting costs onto traders and investors.
Executive director Ian Taylor described the move as a heavy blow to the industry after the introduction of the FCA licensing regime. From January, all crypto startups are required to comply with AML rules and register with the regulator.
In December 2020, the FCA introduced a temporary registration regime for cryptocurrency companies awaiting regulator approval. It was expected to last until 9 July 2021.
In June 2021 the regulator extended the regime to 31 March 2022. The FCA said the initiative would allow crypto-asset companies to continue operating while the regulator conducts a thorough assessment.
In July HMRC began collecting information on customers of foreign cryptocurrency exchanges from overseas tax authorities.
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