Insider Colin Wu, a well-known expert on Chinese blockchain markets, has shared an opinion on a recent announcement made in an official newspaper of the Central Committee of the Chinese Communist Party. According to him, People's Daily of China's take on crypto taxation may be inaccurate.
Should Chinese crypto holders pay taxes?
According to the latest tweet by Mr. Wu, the People's Daily of China has released an article to clarify crypto taxation rules in the PRC. This text claimed that, as long as crypto investments are profitable, tokenholders should pay personal income tax.
Otherwise, crypto investors may be punished for violating the foreign currency exchange rules or laundering money. As covered previously by CryptocComes, the Chinese government launched a nationwide campaign to combat money smuggling through large crypto OTC deals.
Also, holders of credit cards used for illegal crypto trading are "on the punishment list," according to Mr. Wu.
However, the insider shared his opinion that lawyers are unsure about the applicability of personal income tax rules to the digital assset segment.
No rush, taxpayers
Actually, there is no adequate legal framework for crypto taxation, Mr. Wu adds. Risks to ordinary crypto holders may be exaggerated by the CCP newspaper.
At press time, no corresponding law is in effect, so crypto profits should not be taxed. Unless crypto tokens are involved in money laundering and shady forex deals, owning crypto—even with profits—does not pose legal risks to its holders.
In 2020, Chinese authorities' attitude towards crypto remained controversial as polar opposite opinions were expressed. For instance, in September and October, Chinese state-backed media outlets shilled cryptocurrencies over Gold and called Bitcoin the "best asset."
Meanwhile, the CCP may be involved in terminating the much-overhyped IPO of Jack Ma's crypto-friendly Ant Group on the Hong Kong and Shanghai stock exchanges.