KPMG report: Tax treatment of cryptocurrency and challenges of cross-border reporting
Foreseeable problems and potential solutions
Foreseeable problems and potential solutions
Bitcoin and other cryptocurrencies have come a long way from their exchanges on the Silk Road in the early 2000s. As of April 2022, the most popularly tracked cryptocurrencies reached a market capitalization of nearly $2 trillion. The U.S. Treasury estimates that the U.S. overall tax gap will grow from a current projection of $600 billion annually to an astounding $7 trillion over the next decade, with cryptocurrencies playing an increasingly central role, if extraordinary reporting and enforcement measures are not taken.
The effort to characterize cryptocurrencies and the lack of an internationally agreed-upon standard definition has caused issues with the reporting and exchange of information necessary for authorities to tax and audit quasi-anonymous, cross-border cryptocurrency transactions. The unique aspect of cryptocurrency technologies, the jurisdiction-by-jurisdiction characterization of cryptocurrency transactions, and the differing national regimes and competing economic interests will create challenges to establishing the consensus and coordination necessary for an effective exchange of information and enforcement of international cryptocurrency taxation.
Read a KPMG report* [PDF 756 KB] that explores the foreseeable problems and offers potential solutions.
*This report was published in Tax Notes International (September 19, 2022) and is provided with permission.
The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organization. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm. The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 3712, 1801 K Street NW, Washington, DC 20006.