Albanian authorities are finalizing regulations that will allow income and profits from cryptocurrency investments to be taxed. The government intends to start enforcing the tax in 2023, following the adoption of the necessary legislation that has been proposed for public consultation.
Albania prepares to impose taxes on cryptocurrencies as early as next year
The Albanian state is set to start collecting taxes on crypto asset income from 2023, according to a new income tax bill, local English-language portal Exit News reported on Friday. The government also expects to pass a number of other laws and statutes this year to comprehensively regulate the issue.
The special tax legislation is currently open for public consultation. It introduces the concept of taxing cryptocurrency holdings and income derived from virtual assets. The latter have been defined as “a digital representation of a security that can be deposited, traded or transferred in digital form, and that can be used for payment or investment purposes or as a medium of exchange, including, but not limited to, cryptocurrencies” .
However, the definition does not cover central bank digital currencies (CBDCs), the report notes. This is despite the fact that a growing number of monetary authorities around the world are developing a digital version of their national decrees. The list includes major powers such as the United States, the European Union, China and the Russian Federation.
Albanian law also defines cryptocurrency mining as an activity that uses computing power to confirm transactions and obtain virtual assets in exchange. Cryptocurrency mining has long been a gray area, although law enforcement is pursuing illegal mining facilities in the country and has brought charges against some of its operators.
Under the new legislation, any income from cryptocurrency transactions or mining will be classified as corporate income when received as a result of commercial activity. And when the beneficiaries are individuals, they will have to pay the 15% tax on capital gains.
The financial watchdog is tasked with expanding the regulatory framework for cryptocurrencies
Earlier this month, the Albanian parliament ordered the Financial Supervisory Authority (AFSA) to prepare and adopt new regulations on cryptocurrencies by the end of 2022. Albanian law allows cryptocurrency trading platforms to operate legally in the country, but there is currently no authorized entities operating in Albania. Exit News commented.
Two years ago, Albania also adopted a law entitled “Financial Markets Based on Distributed Ledger Technology”. While many welcomed the legislation, critics questioned whether the small southeastern European nation, which still aspires to join the EU, is able to properly regulate its cryptocurrency sector to prevent it from being used for money laundering. , something he is struggling to achieve. get in fiat. space.
The legislature referenced a recent report by the Council of Europe Expert Committee on the Assessment of Measures to Combat Money Laundering and the Financing of Terrorism (Moneyval), which recommended additional measures regarding the risks associated with cryptocurrency. In November 2021, the AFSA passed its first two regulations implementing the cryptocurrency markets law, which introduced capital and license requirements for entities dealing with digital assets.