Virtual currency transaction has been popular internationally for many years. With the fluctuations in the global cryptocurrency market, the Taiwanese market is also actively participating, attracting many investors to join and engage in the virtual currency market. Taiwanese local cryptocurrency exchanges like MaiCoin and BitoEX are gradually increasing in number, offering various virtual currency trading pairs and continuously improving service quality and security.
On the regulatory front, initially, the Financial Supervisory Commission (FSC) and the Central Bank jointly classified virtual currencies as highly speculative digital “virtual products” and not as currency. Additionally, the FSC and the Ministry of Finance have classified security tokens as securities under the Securities and Exchange Act and included them in the taxable scope of securities transaction tax.
However, other types of virtual currencies, such as utility tokens or payment tokens, have not yet seen clear regulations or tax ruling from the authorities regarding their classification and taxation methods. Currently, it seems the FSC and the Ministry of Finance are somewhat passing the responsibility back and forth, waiting for one to take the lead in defining these aspects.
Despite this, under the AML and KYC frameworks, from July 2021, all virtual currency trading platforms in Taiwan require real-name registration. Given the virtual currencies are preliminary classified as highly speculative digital “virtual products” by the authorities, the following presentation is a brief summary by LY on the taxation aspects of such transactions.
Feel free to contact LY if you would like to discuss relevant tax matters!
