Several solutions to one issue: cryptocurrencies and tax accounting in Belarus

The governments of many countries are puzzled by the problems of regulation and taxation of transactions with digital currencies. The main point remains the question of what definition to give to the cryptocurrency itself. Today, each country is trying to solve approaches to taxation of transactions with cryptocurrencies differently, adapting new realities to internal current legislation.

Tax authorities in Israel treat digital currencies as goods and apply tax provisions on commodity transactions to them. 

Swiss officials classify digital currencies as valuable property. Since private capital gains are not subject to taxes in Switzerland, in this case, the person who owns such property pays property tax on its value.  

The authorities of Australia have revised their decision regarding the taxation of transactions with digital currency, where the cryptocurrency itself was regarded as a product or property, and their transactions as barter. Now digital currencies are taxed like other foreign currencies.

Belarus has once again proven its loyalty to digital currencies by publishing a national accounting and reporting standard “Digital Signs (Tokens)”. Belarusian tax authorities used a fairly flexible methodology and did not attach “labels” to the concept of cryptocurrencies. Instead, experts have developed a taxation system that depends on how the income is generated and the intended use of the tokens. 

All kinds of tokens are important, all kinds of tokens are needed

If tokens are purchased for subsequent sale, then in the future, they are classified as goods and are recorded in the appropriate accounts - “Goods”, “Settlements with suppliers and contractors”, “Income and expenses for current activities”. Receipts of tokens as remuneration for services rendered are also taken into account as settlements with buyers and customers. 

Tokens purchased for the exercise of the rights they certify are classified as long-term or short-term financial investments, depending on the circulation period of the tokens (exceeds or does not exceed a period of 12 months). 

Mining in Belarusian accounting will be reflected in the debit of the “Finished Products” account and the “Main Production” credit. 

And here are the own tokens, intended for initial placement in the bank. are not reflected in accounting, but are accounted for in off-balance sheet accounts, as “Property accepted for storage”.. Also included in the off-balance sheet are tokens received from third parties for subsequent sale in the interests of the client - “Goods accepted for commission.” 

Preferential taxation

Until 2023, the government of Belarus provides tax benefits on transactions with tokens and cryptocurrency for individuals and legal entities. 

Residents of High Technology Park (HTP), as well as individuals, are completely exempt from paying taxes on transactions with tokens. Non-residents of the HTP, both legal entities and entrepreneurs, do not pay income tax when exchanging tokens among themselves. If a non-HTP resident exchanges tokens for fiat, then such an operation is considered as the realization of property rights and income tax will need to be paid.   

Today, there is no global, unified algorithm for taxation of transactions with cryptocurrencies. But using the example of Belarus, it can be noted that with a more flexible approach of officials and the desire to find compromises, such extraordinary solutions arise. 

The question remains open - how tax control over such transactions will be carried out. If everything is clear with legal entities, then individuals must take into account their profits themselves and deduct taxes from it. Indeed, for control purposes, fiscal authorities may require the identification of all private owners of digital currencies, which are valuable precisely because of their decentralization and anonymity.