The Chilean government has decided to expand the tax net by including the burgeoning cryptocurrency market in the country. The Internal Revenue Service (Servicio de Impuestos Internos, SII) has recently amended the taxpayers’ Annual Income Tax Returns form by adding a section for crypto assets.
Last year, the Chilean government decided to omit cryptocurrencies from Value-Added Tax (VAT) and classified them as “intangible assets.” But it seems Chileans will have to eventually pay taxes on crypto-related earnings since it adds up to their total income. To keep track of that, the Chilean government has included a new section in the forms, making the taxpayers declare “their own income and/or third-party income from cryptocurrencies companies that declare their effective income.”
This development accompanies an official notification by the director of the SII, Fernando Barraza, who has made it mandatory for all crypto traders to register their operations through “tax-exempt invoices”. The move also aims to monitor the exponentially increasing crypto activity in the country and “offers legitimacy to cryptocurrencies,” where people are increasingly using them as “valid currencies to trade products and services.”
In an interview, a member of an NGO Bitcoin Chile and tax attorney Patrício Bravo revealed that the Chilean cryptocurrency community has been eagerly waiting for SII’s input. He added,
“[The SII] has arranged taxation in the broadest possible way, this is apparently due to two objectives: on one hand expand the tax structure as much as possible to cover all types of crypto assets and, on the other hand, due to the current lack in Chilean legislation of figures specifically designed for this type of instruments, which makes it difficult to generate more specific items.”
The crypto traders will be looking at the changes rather nervously since they already have had their fair share of bureaucratic problems that included blocking of their current accounts by all major banks. That was followed by long and ugly legal battles which resulted in the Third Chamber of the Chilean Supreme Court rejecting their appeals and siding with the banks. But the investors will be hoping for a bit of relief and better news from these latest developments.
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