The Hungarian government has announced a cut on tax for all cryptocurrency earnings, starting next year.
Reports indicate that the government plans to slash the tax on digital asset earnings by 50%. Currently, Hungary applies a 30.5% tax on cryptocurrency earnings, a fact that has led them to believe that investors are not declaring those earnings at all in a bid to escape the higher tax rates.
Slicing that percentage in half to 15% will put crypto on the same threshold as capital gains levies on stock. Officials hope that this lower tax rate will encourage investors to declare their crypto earnings accurately.
Mihály Varga, Finance Minister of Hungary, shared a video on Facebook, on May 11, outlining tax cuts and simplifications continuing into 2022. According to reports, Varga said the move to cut the tax on crypto earnings would allow the country to collect several million forints worth of additional tax revenue.
Building and burning bridges with crypto
Varga also said the decision to slash the tax rate was a step towards transparency for the Hungarian crypto market. While Hungary has no law against cryptocurrencies, they, like many countries, also have no specific legal regulations for digital assets.
It’s a move that comes as part of a recent shift in the crypto space. Some nations are becoming more accepting of cryptocurrencies. For example, banks such as Goldman Sachs and Morgan Stanley now trade in digital assets. Others, however, have harder attitudes. Especially as the rise in crypto popularity is bringing an increase in crypto-related crime and illegal transactions.
Already this year, China and South Korea have enforced regulatory crackdowns on crypto transactions. In addition, Turkey went one step further and outlawed crypto payments altogether amid the digital asset boom. One week after that announcement, authorities launched probes into two Turkish exchanges, Thodex and Vebitcoin, on respective fraud allegations. Nigeria had put a similar ban in place, back in February.
Even more recently, on May 4, reports state that Thailand had introduced new regulations. From September 2021 onwards, cryptocurrency firms will be required by law to enforce in-person Know Your Customer (KYC) protocols.
These regulations, set down by the Thai Anti-Money Laundering Office, have been introduced amid reports that the number of crypto users in Thailand had quadrupled since 2020. Last year, there were 160,000 users, whereas in 2021, there are currently 700,000.