Trying to take its share of the profits, the government of Latvia may accept cryptocurrencies as a legal means of exchange. This year’s tax filing campaign is underway and officials don’t have much time. Two parliamentary commissions and the Ministry of Finance have expressed their views on the matter this week. Latvians may very soon owe the state tax on their gains from crypto transactions.
Also read: Poles Protest Unfair Taxation of Crypto Incomes and Profits
Cryptocurrencies Deemed Dangerous but Taxable
According to the Latvian Finance Ministry, 20% tax can be imposed on capital gains from deals with cryptocurrencies. Its representatives announced the proposal during a meeting with deputies from the Parliamentary Budget and Taxation Committee on Wednesday.
Saeima, the Parliament of Latvia
Some lawmakers reminded their colleagues and constituents that cryptocurrencies are not considered a legal tender in the Baltic state and come with speculative bubbles and financial pyramids. Members of the Financial and Capital Markets Committee, however, noted that cryptos like bitcoin can “function as a means of exchange”.
The Ministry of Finance also revealed that the Latvian government is mulling over comprehensive cryptocurrency regulations. A working group set up by Prime-Minister Māris Kučinskis has been tasked to prepare the proposals. According to the Baltic Reporter, it will study market risks, but also evaluate potential benefits associated with cryptocurrencies.
Policy makers have often criticized cryptos for failing to perform one or more of the functions of fiat money – means of payment, medium of exchange, unit of account, and store of value. It seems, though, that when budget revenues are in mind, the requirements towards “virtual money” are not that strict. The “means of exchange” labeling now gives Latvian authorities an opportunity to tax cryptocurrency transactions. Maybe
