Besides the crypto price itself, perhaps the most discussed topic within the crypto universe is regulations. This is because regulation is considered one of the most crucial steps towards mass blockchain and crypto adoption. This is also because regulations have, in the past, served to boost the crypto industry in certain areas or have completely stifled it in others such as China and India. Law-enforcement and lawmakers are also receiving much more information regarding the crypto industry especially since projects like a Libra are taking foot. This means that more care is being given towards crypto-related laws as well as attention.
It seems New Zealand is heading in this direction as on February 24, 2020, a paper was released by New Zealand’s Inland Revenue Department (IRD) which proposes the simplification of tax invoice requirements as well as the exclusion of crypto from goods and service taxes.
The paper states that there is a growing market for crypto-related assets in New Zealand and that most stakeholders in this market will likely welcome this new regulation. The paper also states that the tax authority does not want to put laws in place that will harm the growth of crypto in any way.
“The definitions used for money or financial services as “exempt supplies” (meaning they are not subject to GST) did not contemplate crypto-assets, meaning GST may be imposed on certain types of crypto-assets, but not others – depending on their particular purpose and design. This inequitable GST treatment is unintentionally favouring certain types of crypto-assets over others and likely resulting in a distortion in the crypto-asset marketplace,” the paper says.
The paper proposes that cryptocurrencies will be exempt from the goods and services tax. At the same time, crypto-related services such as mining will be subject to tax and the purchase of goods and services using crypto will also be subject to the tax.
“The proposed GST changes would only apply to supplies of crypto-assets. Other services related to crypto-assets, that are not in themselves supplies of crypto-assets such as mining, providing crypto-asset exchange services or providing advice, general business services or computer services will continue to be subject to the existing GST rules,” the document says.
For now, public feedback has been sought over the matter before any laws are implemented.