Azerbaijan Central Bank Announces That Digital Currencies Are Subject To Taxation
Azerbaijan is taking another stride towards the legitimization and standard reception of digital currencies and has announced that the coins are liable to taxation in the nation.
In particular, incomes produced by entities will face ‘profit tax,’ and people trading in digital currencies will be liable to ‘income tax’.’ These declarations originate from Nijat Imanov, the deputy director general of the Tax Policy and Strategic Research Department of the Taxes Ministry, who talked amid the second Finance and Investment Forum (FIF) in the nation’s capital Baku on May 5 as revealed by news organization Trend.
“This is formalized as a profit tax for legal entities and income tax for individuals,” Imanov said. “If someone bought a cryptocurrency and then sold it after its price increased, this amount is recorded as income and therefore should be attracted to taxation.”
Following worldwide trends, Azerbaijan saw a huge increment in the interest and usage of digital currencies in the second half of 2017. Elnur Guliyev, founder and chief of Crypto Consulting, said that amid this period, one could profit by investing as small as $10 in the coins.
He said: “But this situation does not reoccur very often. The cheapest option is to buy Bitcoin and wait for the increase in its cost for resale. This option is still working, but it is hard to say how long it will last.”
A year ago, news association Azernews detailed that the position of Azerbaijan’s Central Bank (CBA) with respect to digital currencies was ‘conservative,’ as per the Elman Rustamov, chairman of the CBA, who included that the CBA does not think about digital currencies as an optional method for payment. The comments were made November 21 amid discussions on the 2018 state budget plan at the Azerbaijani parliament.
At the time, Rustamov said: “We think that cryptocurrencies continue to be a dangerous instrument for investing.”
In spite of this more conservative way of dealing with digital currencies themselves, Azerbaijan is in agreement with the market’s fundamental technology. Talking about blockchain, the CBA head stated that the digital technology will add to changes in numerous sectors across the nation, specifically finance.
The bank likewise examined the potential use of blockchain technology in working with outside nations, strikingly neighbors Georgia and Estonia, and the likelihood of incorporating systems of electronic blockchain-based identification into information and payment frameworks.
Rustamov commented: “The Central Bank intends to help in studying this technology and its future use in the financial and banking sector of Azerbaijan, and in the future in public services for the population. For this, we have already started negotiations with leading consulting companies. I think that at the first stage, we must create stable technological and legislative infrastructure, and then start introducing this technology.”