Gains from cryptocurrency transactions will be taxed in Azerbaijan, according to a high-ranking official from the Tax Ministry. Authorities in the energy-rich nation intend to tap into both corporate profits and personal incomes. The country has previously taken a conservative stance on cryptocurrencies but the focus on taxation now signals a change in Baku.
Both Corporate and Private Incomes to Be Taxed
Revenues from crypto transactions are subject to taxation in Azerbaijan, said Nidjat Imanov, deputy-director of the Department of Tax Policy and Strategic Studies at the Ministry of Taxes. Imanov clarified his department’s position during the Financial and Investment Forum held in the capital Baku this Saturday, Trend news agency reported.
“Incomes from operations with cryptocurrencies will be taxed. Formally, this means – corporate profit tax for legal entities, and personal income tax for individuals,” the Tax Ministry’s representative stated. “If someone bought cryptocurrency and then sold it at a higher price, that amount must be reported as income and subjected to taxation,” Imanov explained.
The profits of all resident enterprises in Azerbaijan are taxed under the country’s tax code. Currently, the corporate profit tax rate stands at 20 percent. The personal income tax is progressive and money earned by residents both home and abroad is taxed by the government. Incomes of less than 2,500 AZN a month (~$ 1,500) are taxed at 14 percent, and 25 percent tax is imposed on the amount exceeding that limit.
Buying and Holding Bitcoin Still Works
The volume of cryptocurrency trading is growing in Azerbaijan and the state hopes to increase budget revenues through crypto taxation. Crypto markets registered rapid growth between May and December last year. “During that period, even small investments of $ 10 or so, in almost any cryptocurrency, were profitable,” Elnur Guliyev, founder and CEO of Crypto Consulting, told Trend. After a few weak months this year, the markets are gaining momentum again.
Guliyev warned, however, that markets are not booming every day and added that a certain set of skills is needed to predict which cryptocurrencies will rise. The obvious choice again, according to the expert, is to buy bitcoin and hold it until its value increases enough to justify selling it. “This option still works but it’s hard to say for how long,” Elnur Guliyev said.
Azerbaijan to Develop Crypto and Blockchain Technologies
The Eurasian country, rich in oil, gas, and other natural resources, has until recently maintained a relatively conservative stance towards cryptocurrencies. In December, the chairman of the Central Bank of Azerbaijan, Elman Rustamov, stated that cryptocurrencies “are not recognized as a legitimate means of payment.” He also insisted that cryptos “continue to be a dangerous instrument for investing”, stressing that comprehensive regulations should be adopted. Nevertheless, the crypto taxation talk in the executive branch of government now indicates that moods are changing in the corridors of power in Baku.
Earlier this month, representatives of the crypto sector set up a new association called “Center for the Study and Development of Cryptocurrency Markets and Blockchain Technologies.” Its main activities will be to conduct educational work, prepare regulatory proposals, and offer consulting services. The center will also focus on the implementation of blockchain technologies in the corporate and banking sectors and support projects funded through initial coin offerings. Its representatives will seek cooperation with foreign experts.
Do you owe tax on gains from cryptocurrency transactions in your country? Tell us in the comments section below.
Images courtesy of Shutterstock.
At Bitcoin.com there’s a bunch of free helpful services. For instance, have you seen our Tools page? You can even lookup the exchange rate for a transaction in the past. Or calculate the value of your current holdings. Or create a paper wallet. And much more.