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Bitcoin may still be illegal in Colombia, but that doesn’t stop the authorities from taxing its investors.
The Colombia Tax and Customs Office announced that Bitcoin is taxable despite the government had already declared Bitcoin isn’t legal in the country.
In an announcement by the Superintendency of Corporations back in December 2016, Bitcoin was declared not being a legal tender following the increase of many investment scams linked to Bitcoin.
The authorities stated that the only legal tender that the country recognizes is the Colombian peso issued by the Colombian Banco De Republica.
Head of the Superintendency of Corporations Francisco Reyes Villamizar discouraged people from investing in virtual currency scams, claiming Bitcoin is somehow related to them.
At the same time, the interest in Bitcoin has substantially increased over last years and months with many investors following the movement of this new type of investment. According to the Financial Superintendence of Colombia, Bitcoin is considered a high-risk investment.
Being an investment, it is taxable. But it would be a bit difficult to place tax provisions on the cryptocurrency.
The government agency plans on to implement some tax rules on Bitcoin such as taxing the sale of particular cryptocurrencies in the market. Attorney Juan Sebastian Peredo states that people should report cryptocurrency investment profits on their income tax return correspondent to the tax rules.
Bitcoin expert Jonathan Alexander Higuera states:
“In Colombia, people are not required to report their investments or transactions in Bitcoins or any other cryptocurrency, so it can be used to evade taxes.”
Due to this, Colombia wants to implicate some tax rules for Bitcoin investors. Even though the Colombia’s Central Bank does not declare Bitcoins to be legal, this cannot stop people from wanting to invest the cryptocurrency as several markets allow investors to invest.
The government plans to put more efforts in taxing the investments in order to regulate profits from cryptocurrencies with the stated aim of ultimately preventing crimes such as money laundering or tax evasion.
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