The Central Bank of Iran is planning to levy tax on cryptocurrency-related businesses.
Mehran Mahramian, CBI deputy governor for innovative technologies said, "Decision in this area is challenging. Countries have different approaches to it…For instance, China has banned everything in this domain, while the European Union and North America have not imposed major restrictions on digital currency exchanges.
However, these countries have implemented stringent tax regimes imposing heavy taxes ranging from 3% to 37% on transactions and mining activities based on asset value," way2pay website quoted him as saying.
"The main decision in this area may be related to tax on capital gains where cryptocurrencies would also have to pay tax," he said. "We intend to adopt a regulatory approach similar to the EU in the crypto sector."
Mahramian underscored the need for informed decisions when venturing into tax issues, noting that no final decision has been made so far.
In May EU ministers agreed on stronger rules to crack down on the use of cryptocurrencies in tax fraud, as Brussels bolsters its efforts to regulate the volatile sector. During a meeting of EU economy and finance ministers, they agreed on rules to go after individuals who stash their cash where tax authorities have no oversight.
The rules will close loopholes that allow people to avoid taxation on their income using crypto assets, Swedish Finance Minister Elisabeth Svantesson said. "This reduces the risk of crypto assets being used as a safe haven for tax avoidance and tax fraud," she added in a statement.
Regulators worldwide are increasingly worried about the lack of oversight of the digital currency sector but the EU has already taken steps to protect investors. The 27-member bloc's parliament last month approved the world's first comprehensive rules covering crypto assets, which include cryptocurrencies such as bitcoin and ethereum and tradable tokens whose value is secured using blockchain technology, such as NFTs.
Finding Consensus
The CBI official admitted the difficulty of finding a strong consensus in the crypto realm. With the emergence of new and sophisticated tools, fraudsters and criminals to will be tempted to exploit them.
"In 2016, a scenario analysis was conducted at the regulator, examining four scenarios for public acceptance and the adoption of cryptocurrencies by the authorities."
Based on the analysis from the time of Bitcoin's emergence until now, there was initially no public acceptance or recognition from authorities, with banks also denying its existence. “However, with the subsequent significant price increases, public interest grew, and it now seems to have reached a stage of stability."
"Currently, with the intense discussions surrounding Central Bank Digital Currencies (CBDCs), the approach of governments has become more positive."
Last year the Iran National Tax Administration (INTA) prepared a draft proposal for taxing cryptocurrency exchanges and called on regulators to create the groundwork to legalize crypto exchanges.
"Legalizing crypto exchanges is necessary [for tax revenue]. Legal operations must be limited to authorized exchanges allowed to convert currency while keeping track of transactions," read an excerpt from the INTA proposal.
INTA is of the opinion that stringent measures against crypto business have had adverse effects and by extension created conditions rife for the black market.
Transactions of the exchanges can be used by INTA as the basis for tax. "Regulations must include penalties and consequences for legal exchanges refusing to provide user records to INTA," the proposal said.
The tax authority has proposed three tax regimes for crypto exchanges, namely tax on capital gain, fixed base tax and occupational tax. However, it has not said anything about the mechanism for taxing such companies.
The proposal sets a cap on transactions with decentralized exchanges in accord with anti-money laundering regulations.
Mining virtual currency is legal in Iran and miners can operate under rules approved by the government in 2019. Per law, miners of cryptocurrencies are recognized as owners of the digital asset.
However, the law states that digital currency cannot be used for payment inside the country. However, banks and licensed moneychangers can use digital money mined by authorized miners in Iran to pay for imports.
