BTC India
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Say if you have been buying digital goods with crypto and selling it back to others for profit with crypto. How will I withdraw this into fiat if its above the taxable amount? I won’t have proof that I have done this will it be sketchy withdrawing it?
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You will have to keep track of all the sales & purchases, and you’ll have to report it to the government. If they don’t believe you, they will audit you, which means you’ll have your show them your records.
What do you mean withdraw it? Withdraw means “move.” It does not mean sell. Do you mean sell?
What do you mean above taxable amount? If you make a ton of gains it will be taxed. No limits. Make as much profit as you like.
Taxes are levied by govermental entities within their defined jurisdictions. Bitcoin is beyond that, bitcoin operates without taxation.
The governments can ask people that use bitcoin to pay taxes when they live under their jurisdiction.
People have 3 options. 1) Comply and pay everything the government asks. 2) Hide your bitcoin transactions for the government and risk legal consequences or 3) move jurisdictions.
Generally, taxation upon buying something with bitcoin is considered the same as on selling the bitcoin directly.
CGT on Bitcoin is a theft and an accounting nightmare. We won’t liberate ourselves from the state oppression if we keep playing by their unjust rules. Bitcoin is a currency. I am not being taxed for changing USD to EUR and back at another rate. BTC should be likewise exempt. Petition your governor.
OP does ask a good question, especially if generalized to the whole economy.
Say a significant proportion (dunno how much this is; maybe > 5%?) of all domestic trade is being done over LN. The State won’t be able *see* it, let alone tax it.
Longer term, I’m evisaging something like the game of Go (where the objective is for your stones to surround your opponent’s and capture them). In this case, whole chunks of the economy have become Bitcoinized.
Do you think this is feasible? Likely? Gradually, then suddenly? And what will the State do?
It’s really no different to having capital gains on anything else. The system relies on self-reporting and auditing. It’s always been this way. Pay your taxes.