Divly, a Swedish tax firm specializing in cryptocurrency, recently published a report claiming that only 0.53% of crypto investors pay taxes. However, some experts have raised doubts about the accuracy of the report’s methodology.
Divly’s analysis was based on the ratio of the number of people who reported investments in cryptocurrencies in their tax returns to the volume of search queries related to digital asset taxation in various countries.
The firm also utilized data on the number of cryptocurrency holders in each country from the Statista platform.
According to Divly’s report, Finnish investors were the most compliant when it comes to reporting their crypto investments, with 4.09% of investors in this country declaring their crypto holdings in their tax returns.
Australians came in second with 3.65%, and Austrians ranked third with 2.75%. On the other hand, Indian, Indonesian, and Filipino crypto investors had the lowest rate of reporting, with only 0.07%, 0.04%, and 0.03% respectively.
However, Danny Talwar, the head of tax at Konly, a firm that also assists with cryptocurrency taxes, expressed skepticism about Divly’s findings, stating that the reported figure of 99.5% of investors who do not pay taxes on cryptocurrencies may not accurately reflect the situation in countries with clear and strict cryptocurrency tax codes, such as the USA, Canada, Australia, and India.
Talwar acknowledged that the risk of tax evasion in the crypto market is higher compared to other asset classes, but many countries are already implementing procedures to obtain trading data from cryptocurrency exchanges to address this issue.
In India, for example, the tax authority reportedly collected $19 million in taxes on cryptocurrency transfers during the 2022/2023 fiscal year.
As the crypto market continues to grow, it remains to be seen how tax regulations and enforcement will evolve to keep pace with this rapidly changing industry.