Cryptocurrency Blamed for Profit Shifting in Australia
CANBERRA – The tax system in Australia cannot adequately deal with modern cryptocurrencies, and the tax system needs to be updated to take such technologies into account.
In a discussion paper issued on March 30th the Treasury of Australia claimed that Bitcoin and other cryptocurrencies undermine the national tax system and contribute to profit shifting and erosion of the tax base.
In the paper it was specifically pointed out that “…new ways of transacting, including cryptocurrencies such as bitcoin, were not contemplated when the current tax system was designed”, and these ongoing developments may hinder a company’s ability to accurately and appropriately determine its tax obligations in a specific country, opening a significant pathway for profit shifting.
Despite pointing out some of the potential pitfalls of cryptocurrency technology, the Treasury did not suggest any means of addressing the problem.
Supporters of cryptocurrences have already claimed that the points in the latest discussion paper are adding to the increasingly hostile environment felt by cryptocurrency businesses in Australia, and it was noted that recently a number of such businesses have recently been driven offshore by the harshness of the current rules regarding the technology.
