Revenue Agency in Bulgaria Puts Cryptocurrency Selling Companies under the Scanner

Bulgarian tax authority, the National Revenue Agency (NRA), announced on Monday that it would be inspecting operations of companies that deal in cryptocurrencies. The main motive behind this is said to scrutinize whether cryptocurrency investors and the companies owe tax and are compliant with the taxation policies of Bulgaria.

According to the NRA, there are nine functional companies in the country which deal directly or indirectly in cryptocurrency. The NRA stated that it would put companies specifically dealing in crypto assets under the radar. Bulgaria has, hence, joined the long list of countries that have shown resistance against drawbacks of cryptocurrencies.

Apart from scrutinizing these companies for their own taxes, the NRA will investigate accounts of people investing through these companies and their transactions related to cryptocurrencies. The income tax slab in Bulgaria is 10% flat, and the government will directly deduct it from crypto trade earnings if discrepancies are found. The NRA has already started the procedure, and the investigation will be completed in the coming weeks. Information thus collected will be used to determine how much tax was liable on the account and how much have they actually paid.

Apart from Bulgaria, there are several countries where governments are quite strict on crypto assets and have stringent rules in place for it. Last year, India’s first crypto ATM was closed down within six days of its launch. Enforcement authorities detained the owners of the machine. The Reserve Bank of India has also prohibited commercial banks from providing services to cryptocurrency related transactions.

Also, Denmark Tax Authority is now authorized by the Tax Council to investigate all transactions related to digital currencies. Ministry of Treasure in Spain had prepared a list of over 15,000 investors whom it had put under strict monitoring. Similarly, Israel, too, has been targeting cryptocurrency traders to prevent tax evasion. Even South Africa’s agencies are working hard to identify defaulters by scanning digital asset companies.

However, government authorities have their own justification for these moves. The biggest of them is tax evasion. When cryptocurrencies boomed for the first time, no government had any protocol or tax regulation for such assets, making it the perfect breeding ground for tax defaulters. Experts across the globe have opined that the advent of cryptocurrency has made tax evasion extremely simple for the notorious dodgers, backed with several such instances surfacing recently. This alarmed the agencies to be vigilant enough to prevent malfunctioning. The result is that almost suddenly, there have been numerous initiatives by governments across the globe to curb unchecked transactions and streamline cryptocurrency with other trading assets.

The biggest USP of cryptocurrencies, anonymity, is becoming its most significant weakness as tax dodgers are misusing it to evade tax. During last year’s G20 summit in Argentina, representatives of states agreed to develop an international tax framework for cryptocurrency trade. With Japan leading the way, representatives from the 20 biggest economies accepted that the rise of cryptocurrencies has made tax evasion much easier globally.

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