A recent update on Revenue and Customs regulations has introduced a digital services tax that will be imposed on cryptocurrency exchanges operating in the UK.
Crypto exchanges in the UK will now have to pay a 2% digital services tax according to reports. UK tax authority, HMRC, does not recognize digital assets as financial instruments and therefore exchanges are not eligible for financial exemptions.
The authority included cryptocurrency exchanges under the Treasury’s tech tax. The digital services tax on revenue was introduced in April 2020 targeting social media and search giants such as Facebook and Google.
The latest hit to crypto exchanges is a result of the HMRC’s classification of crypto assets. CryptoUK which is the trade body representing the digital asset sector in Britain has stated that the tax is unfair and is likely to be passed on to investors and traders.
The regulator implemented a ban on crypto derivatives in January, and in June, the FCA warned consumers against 111 crypto firms that had yet to register with it. UK’s tax authorities reportedly demanded that several crypto asset exchanges hand over details on customers from transactions and holdings in August 2019.
