Swedish cryptocurrency tax firm Divly has released a new report estimating that only 0.53% of global cryptocurrency investors will pay taxes on their cryptocurrencies by 2022 however, tax experts have questioned the numbers and methodology.
The Divly report, published on April 5, arrived at the estimate after analyzing the relationship between the number of people declaring cryptocurrencies on their tax returns and the number of searches for crypto tax-related keywords in each country. It also uses the number of cryptocurrency holders in each country in its calculations, based on Statista’s Global Cryptocurrency Report.
The report estimates that Finland will pay the highest percentage of taxes required for cryptocurrencies in 2022 at 4.09%, followed by Australia at 3.65%. The United States ranks 10th on the list, with an estimated 1.62% of cryptocurrency holders paying taxes, while India, Indonesia, and the Philippines pay the lowest tax rates for cryptocurrency investors at 0.07%, 0.04%, and 0.03%, respectively. The methodology used to arrive at the estimates is questionable. The report itself qualifies the results by noting that search volume data may not accurately reflect the actual number of crypto taxpayers, as not every taxpayer searches online for crypto tax-related information.
Another assumption of the methodology is that the number of searches related to crypto tax reporting does not differ across countries. In addition, it warns of potential bias against countries with greater internet accessibility and more accurate search volume data.
Danny Talwar, global head of tax at crypto tax software Koinly, took issue with the report’s suggestion that most crypto investors pay no taxes. He told : “It is likely that 99.5% does not reflect countries with specific crypto tax guidance and strict compliance requirements, such as the United States, Canada, Australia, and India.”
Blockchain Australia board member Greg Valles, a chartered accountant, also said he could not "assert that the method is 100 per cent accurate". Both tax experts noted that the government's data matching and surveillance efforts mean that avoiding crypto taxes is becoming increasingly difficult.
Valles said that as government technology becomes more sophisticated and professionalized, it will be easier to spot anyone not complying, and warned that those who do not report their cryptocurrency profits now could be banned in years to come. catch up. Talwar emphasized that while cryptocurrencies carry a relatively higher risk of non-compliance than other asset classes, tax authorities in many countries have procedures in place for obtaining data from cryptocurrency exchanges.
He added that Koinly has seen a “significant increase” in crypto tax awareness among investors in these jurisdictions, with only “15% of surveyed crypto investors” not aware of their crypto tax reporting obligations.
