Britain’s tax authority, Her Majesty’s Revenue and Customs (HMRC) regulation brings a recent update imposing a digital services tax on the crypto exchange platforms functioning in the United Kingdom.
As per the report by Telegraph, the exchanges in the nation will now be compelled to pay a 2% service tax. The report further added that the regulator does not recognize crypto assets as financial instruments, and hence, exchanges are not out of financial exemptions.
In 2019, after the imposition of heavy regulatory pressure, the Crypto Exchanges had urged The World Federation of Exchanges (WFE) and the UK Financial Conduct Authority (FCA) not to ban crypto derivatives for retail investors. However, the regulator banned all crypto derivatives in January this year.
The regulators are taking solid steps to structurize the crypto market in the country. Recently, as TheCoinRise reported on November 22, the Financial Conduct Authority (FCA) has decided to spend $670,000 to train its staff about crypto terrorism funding issues.
CryptoUK opposes digital services tax imposition
The digital services tax came first into the picture in April last year. The authority this Sunday included exchange platforms under the Treasury’s tech tax. Under this tax, the country targets social media and search companies like Facebook and Google.
HMRC recently classified the crypto assets into different categories, which resulted in the latest blow to crypto exchanges as it explains:
“There are a wide variety of crypto assets, each with different characteristics. Because crypto does not represent commodities, financial contracts, or money, it is unlikely that crypto exchanges can benefit from the online financial marketplaces and digital services tax exemption.”
In September, the British parliament announced that it is starting to inquire about the adoption of the digital pound and asked to submit evidence to support the innovation in the country.
The trading entity representing the crypto asset sector in the UK, CryptoUK, believes that the tax is unfair and will eventually be passed on to investors.
Ian Taylor, banker and executive director at CryptoUK, stated that imposing digital services tax and treating crypto differently to other financial tools like stocks and commodities is injurious to the crypto sector.
Here’s the detailed guide on how you can buy Bitcoin in UK.