Tax Authority Calls for Legalizing Crypto Exchanges

EghtesadOnline: The Iranian National Tax Administration has prepared a draft proposal for taxing cryptocurrency exchanges and called on the relevant regulatory bodies to pave the way for legalizing the crypto exchanges.

News ID: ۷۸۶۸۱۲

08 August 2021

"Legalizing crypto exchanges is necessary [for levying tax]. Legal operations must be limited to authorized exchanges that are allowed to convert currency while keeping track of transactions," reads an excerpt from the INTA proposal published by Way2pay.

INTA is of the opinion that stringent measures against the  crypto exchanges have the reverse effects and create the conditions for the black market.

Transactions of the exchanges can be used by INTA as the basis  for taxation. "Regulations must include penalties and legal consequences for legal exchanges refusing to provide users' records to INTA," the proposal said.

The tax authority has proposed three tax regimes on crypto exchanges, namely tax on capital gain, fixed base tax and occupational tax. The proposal does not say anything about the mechanisms for taxing such companies.

The proposal sets a cap on transactions with decentralized exchanges in accord with anti-money laundering regulations.

Mining virtual currency is legal in Iran and miners can operate under rules approved by the government in July 2019. As per law, miners of cryptocurrencies are recognized as owners of the digital asset.

However, the law states that digital currency cannot be used for payment inside the country. However, banks and licensed moneychangers can use the digital currency mined by authorized miners in Iran to pay for imports.

Last week the Vice Presidency for Legal Affair said converting one cryptocurrency into another digital currency is not illegal.

Taxing Miners

Back in 2019, after the government's move to recognize cryptomining as a legal industry INTA came up with rules for taxing cryptominers.

As per INTA rules crypto mining is a taxable business, like other industrial activities, and should follow requirements of the Central Bank of Iran in repatriating their overseas earnings. It was announced that cryptocurrency miners are eligible for tax exemption if, like non-oil exporters, they repatriate their overseas earnings.

Special tax regulations regarding the location of industrial units and their distance from major cities do not apply to cryptomining. Regulations restrict establishing manufacturing units in major urban areas.