As reported by ETHNews, the tax chiefs of five countries have reached a consensus to collaborate on issues pertaining to crypto tax and crimes. The Joint Chiefs of Global Tax Enforcement, also known as J5, is made up of the tax authorities of Australia, the UK the Netherlands, Canada and the US. These countries have come together with the aim of sharing both public and private information and technology, conducting joint exercises and general collaboration, as they investigate all forms of tax crimes.
The J5 collaboration is made up of senior tax officials and heads of tax crime from the relevant agencies in each country. These agencies are: the United States Internal Revenue Service Criminal Investigation (IRS-CI); Her Majesty’s Revenue & Customs for the United Kingdom; the Canada Revenue Agency (CRA) for Canada; the Australian Criminal Intelligence Commission and Australian Taxation Office (ACIC) for Australia; and the Dutch Fiscal Information and Investigation Service (FIOD) for Netherlands.
By virtue of tax law, only the country from which a commodity originates has the right to tax it. So how does one know the origin of decentralized assets?
As far as the J5 is concerned, cryptocurrency is a threat to tax law. Their focus happens to be on apprehending perpetrators of offshore tax crimes who have now resorted to cryptocurrencies, thanks to its anonymous P2P payment system. They hope to pool their resources and gather a stronger force to extend their authority across borders. About this, Hans van der Vlist, General Director of the FIOD, had this to say:
“The unique thing about the J5 is the operational collaboration between five countries on tackling professional enablers that facilitate offshore tax crime, cybercrime and the threat of cryptocurrencies to tax administrations, as well as making best use of internationally available data and technology.”
Results of their research and collaboration could form the basis for global crypto taxation. Recently, the court ordered Coinbase to produce the data for thousands of its customers allegedly owing billions of dollars in tax.
Taxing crypto means authorities are settling for the classification of cryptocurrencies and other digital assets as commodities like rice and gold that can be taxed. This is contrary to tokens, which most countries still classify as securities, because of their nature.
During their first meeting held at Montreal, the J5 supergroup deliberated on how to fight cybercriminals (and even cyberterrorists), using crypto to obscure their financial trail. Likely, there will be more meetings soon as they begin to put in place a solid operational strategy.
It is commendable that the government’s regulation efforts in the crypto space are geared towards protecting citizens, rather than stifling the growth of this new technology.