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Representatives of the fund stressed: the anonymity and decentralized nature of cryptocurrencies create certain problems for the authorities, and tax systems are not always able to cope with the difficulties of taxation of digital assets. For example, citizens often use cryptocurrencies to try to avoid taxes.
“Cryptocurrency transactions are similar to cash transactions – they have significant potential to evade the attention of tax authorities. Today the share of purchases with cryptocurrencies is insignificant. However, with the spread of such payments, if you do not prepare tax systems, there is a chance of large-scale evasion of VAT and sales taxes, and thus reduce state revenues. And that may be one of the biggest threats from cryptocurrencies,” the IMF said in an article on its website.
The authors emphasize: It is possible to manage the risks with centralized cryptocurrency exchanges and venues, but decentralized exchanges present a whole other level of challenges:
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“Centralized venues can implement standard KYC regulations and withholding taxes. Many countries are already preparing appropriate laws and regulations. But such rules may well encourage users to switch to decentralized exchanges and P2P trading. Then no government will be able to control transactions and calculate the tax. It is extremely difficult for the IRS to implement its own rules in this situation.”
Earlier, IMF officials said that bans on cryptocurrencies are unlikely to be effective in the long term.