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Her Majesty’s Revenue & Customs is seeking views from investors, professionals and firms engaged in the DeFi sector.
UK considers new tax rules for DeFi
The UK government wants help deciding how DeFi activities should be taxed.
In a call for evidence published on 5 July, Her Majesty’s Revenue and Customs (HMRC) has called on crypto industry stakeholders for input on the country’s tax treatment of crypto-based loans and stakes.
The open consultation seeks consideration of token staking in the context of decentralized finance, along with the taxation of crypto asset loans derived from DeFi lending protocols such as Compound and Away. According to the advisory, the government will use the evidence provided to ascertain “whether the administrative burden and cost for taxpayers can be reduced. [DeFi] activities, and whether tax treatment can be better combined with the underlying economics of the transactions involved.”
Evidence has been sought after the government’s April 4 announcement of a package of measures designed to keep Britain’s financial services sector on the cutting edge of blockchain technology. In terms of the proposed measures, UK Chancellor Rishi Sunak said he wants the UK to become “a global hub for cryptocurrency technology”, while citing the need for clear and appropriate guidelines, which will help the growing industry flourish. allows flowering.
Those wishing to look into DeFi tax treatment in the UK have until August 31 to submit evidence to HMRC. Following the call, the government will publish a summary of the responses and details of its next steps.
Today’s DeFi tax call for evidence is not the first consultation paper the UK government has published in recent months. In May, Her Majesty’s Treasury published a paper exploring ways to ease the financial stability issues associated with digital payment assets in the wake of the collapse of Terra. Like today’s open consultation, the paper invited feedback from industry stakeholders with a deadline of August 2.
Disclosure: At the time of writing this article, the author held BTC, ETH, and several other cryptocurrencies.