Cryptocurrencies have taken on a big boom. Bitcoin is on the rise and even the Venezuelan government of Nicolás Maduro has bet on a Cryptocurrency, the Petro. This growth in the economy of Cryptocurrencies worries tax collectors, especially of those countries where their citizens must pay more taxes. Many believes that the anonymity surrounding transactions with Cryptocurrencies could influence these authorities to lose track of taxpayers' money; but is this really as such?
Today, tax collectors have been able to access the records of the world's major banks. Bank secrecy seems to have been left behind, because, in the face of governments' pressure and threats of sanctions, financial Institutions have opted to open their books not only to the US IRS, but also to the Western country's tax collectors.
Are Cryptocurrencies the solution to ensure privacy in transactions?
Are Cryptocurrencies the solution to ensure privacy in transactions and avoid the existence of total control over the assets of each citizen? It is true that tracing Cryptocurrencies transactions by the way they are made, is very difficult; But at the same time, the tax authorities know that there is a lot of monetary transactions and as a result, have redoubled their efforts to prevent the economy of Cryptocurrencies from escaping their control.
What are the authorities doing now? If they previously requested banks to deliver their customers' records, they now press the major sites that market the Cryptocurrencies to share their customers' data and transactions. What happened with Coinbase is a sign of how much interest the IRS landed to the Cryptoccurencies.
In the battle they waged and apparently won against traditional banks, tax authorities, such as the IRS, demanded mail providers, federal express, to deliver shipments between banks and U.S. citizens. If we were to bring it to the current stage, then the IRS could cite internet services providers, electronic wallets or other electronic commerce mechanisms to display their transaction logs.
In addition, when tax collectors understood that they did not have sufficient resources to audit all those with offshore bank accounts, they implanted a "tax shield" program, whereby offshore account holders could fulfill late taxes, paying a fine and avoiding jail. Now these authorities could present a similar idea regarding the Cryptocurrencies.
If we take into account the efforts that these authorities have made to maintain strict control over the payment of citizens' taxes, it is predictable that they will make that same effort or, even more, in order to tax the gains obtained from Cryptocurrencies. Faced with this very possible scenario it doesn’t seem risky to predict a strong confrontation between the tax collectors and the economy of the Cryptocurrencies.
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