Pay Tax on Your Bitcoin Profits or Face Punishment, Mexican Auditor Warns
An auditor has warned that Mexicans must pay tax on bitcoin (BTC) and altcoin trading profits – or run the risk of becoming earmarked as money-laundering offenders.
Per the news agency EFE, via El Nacional, Fidel Ortiz, the director-general of the accountancy FIXAT, claimed that BTC investment had jumped in 2020 and added that even though the sector was largely unregulated, many traders were currently evading the requirement to pay tax on their profits.
He stated that those doing business in crypto must register with tax authorities in an attempt “to avoid being considered as money-laundering operations.”
Crypto tax is something of a grey area in Mexico. Although the government and central bank are still yet to take an official position on taxing traders, many tax and legal experts agree that the spirit of the existing tax code requires traders to declare their profits as intangible assets. Some claim that the current VAT tax law covers crypto trades.
And per a Lexology post from the Guadalajara-based legal firm Ramos, Ripoll & Schuster, “Mexico has no specific tax framework for cryptocurrencies. However, it is expected that there will be one in the future.”
The lawyers added:
“The lack of explicit regulation does not imply that taxes should not be paid for gains and losses or that value-added tax is not applicable.”
Ortiz, meanwhile, added that while bitcoin is “not yet controlled by any government or bank” and, “in the case of Mexico,” was not subject to any “particular regulation,” nonetheless profits were “taxable.”
“It doesn’t matter if [traders’] income is accrued by using a digital platform with servers based in other countries. The obligation to pay taxes still exists and must be fulfilled so as not to incur any fault or omission in the eyes of the financial authorities.”
And Ortiz warned that taxpayers who fail to declare their bitcoin investments would inevitably land in hot water.
Tax authorities, he stated, would invariably “detect a fiscal discrepancy,” noticing that traders were making use of “undeclared income.” This, he said, could lead to punitive measures depending on the scale of the undeclared funds accrued.
The same firm earlier this year warned (also per EFE, via the LA Times) that tax evasion in Mexico hit the USD 69.8bn mark last year, a figure that is equivalent to 6% of the nation’s GDP.
FIXAT said that higher-band taxpayers accounted for a whopping 52% of all of Mexico’s tax evasion.
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