One of the trends that people have noticed in the last few months is governments trying to find a way to improve and develop regulations to protect the economy and cryptocurrency holders. It has included many countries regulating and imposing laws that all cryptocurrency users should follow. In other countries, the government has rushed to impose taxes meant to help the government regulate cryptocurrency or reduce people’s morale to invest in technology. In Africa, citizens in Nigeria and South Africa have to pay taxes on any profit they make from cryptocurrency. It is a joke considering that the Nigerian government is trying to ban cryptocurrency in the country. Countries with different approaches to cryptocurrency will develop different rules depending on their goals. But Portugal has been making headlines due to its policies and regulations. Less than three weeks ago, the country decided to go crypto. They started issuing licenses to any financial organisation that wanted to offer cryptocurrency services to their customers. When the news broke, they had already issued a permit to one of the largest banks in the country, who were ready to roll out their cryptocurrency services. This week Portugal hits the headlines again, but for a more convincing and motivating reason. Recent reports from the finance ministry in Portugal state, or rather, provide guidelines on their taxing system for cryptocurrency users and holders.
These words have led to an international controversy if the demanding system is manageable and efficient. Some details include: First, investors won’t be taxed on their cryptocurrency gains. If a person holds cryptocurrency in one token or another, their profits will not affect their income tax code under category E; dividend and interest income. It means if people have savings in their banks and decide to invest in cryptocurrency, they will not be taxed if their money makes any profit in their wallets or through any other cryptocurrency-earning idea they choose. Although this is the case, there is an exception. The exception is if a person or an organisation makes money from cryptocurrency as a profession. You will have to pay cryptocurrency taxes if you make money primarily from cryptocurrency investment. It will include people who invest in the technology and are involved in P2P trading as commonly done in Arica. It is where people buy tokens at low prices, wait for the prices to increase, and sell immediately. It also includes people whose primary source of income is making money from crypto lending. The ministry of finance provided these regulations and tax codes. These taxes were categorised as personal income tax code category G, the capital gain tax. The second is Category B which includes freelancing taxes. These taxes caused a lot of controversy for several reasons. Many people spoke up against the taxes levied on people whose primary income source is cryptocurrency investment. These crypto traders and miners spend most of their time, effort, and money on cryptocurrency. But although this is the case, it offered its citizens the ability to use cryptocurrency as a side hustle where you could earn passive, tax-free income.
