Albanian authorities are finalizing regulations that will allow the taxation of income and profits from cryptocurrency investments. The government intends to begin taxation in 2023 after adopting the necessary legislation proposed for public consultation.
Albania decides to impose crypto tax as early as next year
The Albanian state will have to start collecting taxes on income from crypto assets as of 2023, according to a new income tax bill, local English-language portal Exit News reported on Friday. The government also hopes to pass a number of other laws and ordinances this year to comprehensively regulate the issue.
A special tax law is currently open for public consultation. It introduces the concept of taxing income derived from crypto holdings and virtual assets. The latter is defined as “a digital representation of value that can be deposited, traded, or transferred in digital form and used for payment or investment purposes or as a medium of exchange, including but not limited to cryptocurrency.”
However, this definition does not cover central bank digital currencies (CBDCs), the report notes. This is despite the fact that monetary authorities around the world are developing digital versions of their own currencies, and a growing number of them. The list includes large countries 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 verify transactions and obtain virtual assets in exchange. Law enforcement has gone after illegal mining facilities in the country and prosecuted some of their operators, but cryptocurrency extraction remains a gray area.
Under the new law, income from crypto trading or mining is classified as corporate income if it is received as a result of a business activity. And if the beneficiary is a private person, they must pay a 15% capital gains tax.
Financial watchdog ordered to expand crypto regulatory framework
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 crypto trading platforms to operate legally in the country, but there are currently no licensed entities operating in Albania, Exit News remarks.
Two years ago, Albania also adopted a law entitled “Financial Market Based on Distributed Ledger Technology.” While many have welcomed the law, critics question whether Albania, a small country in southeastern Europe and still an EU hopeful, has the ability to properly regulate the crypto sector to prevent it from being used for money laundering, something it is struggling to achieve in the fiat space.
The legislature referred to a recent report by the Council of Europe’s Committee of Experts on Anti-Money Laundering and Assessment of Terrorist Financing (Moneyval), which recommended additional measures regarding the risks associated with cryptocurrencies.In November 2021, the AFSA approved the first two implementing crypto market laws rules approved, introducing capital and licensing requirements for businesses that handle digital assets.
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