Hungary is going to cut the tax rates on crypto earnings by 50% starting next year in a bid to boost crypto adoption and use in the country. The announcement was made by the Mihály Varga, Minister of Finance earlier today.
*HUNGARY TO CUT TAX ON CRYPTOCURRENCY EARNINGS BY 50% FROM 2022
— *Walter Bloomberg (@DeItaone) May 11, 2021
At present any gains made via crypto trading are categorized under “other gains,” on one hand crypto-to-crypto transactions are non-taxable, on the other any profit made from selling or exchanging virtual currency is considered “a taxable event.” Any corporate involved with cryptocurrencies currently face a standard 9% tax apart from the 2% local business tax.
Crypto mining in the country is taxed under payroll tax law because it is considered “money obtained through the use of a software” and miners face 15% in personal income tax and an additional 22% health contribution tax.
Countries Looking to Regulate Crypto Better
Hungary might be among the first countries to cut tax rates on crypto gains, but in absence of a regulated sector, the tax cuts or increases could not give an exact picture of crypto adoption in the country. While Hungary is currently working towards standard crypto regulations, many other European and American counterparts are also working to regulate cryptocurrencies better to make the most of the growing $2.5 trillion ecosystems.
The US SEC chief Gary Gensler in his recent testimony before of Financial Service Committee reiterated the same and called for rules to regulate the growing crypto market better to ensure better investor protection. Gensler who has taken over the SEC chair recently is expected to bring better and inclusive crypto regulations to help the US become a thriving ground for crypto companies.
South Korea on the other hand is planning to impose a 25% taxation on crypto gains, and as per recent reports, a majority of the traders in the country are in favor of the new tax proposals.