The adoption and use of cryptocurrencies continues to expand. This brings countries to make some regulations and impose obligations on cryptocurrencies.
The UK has also become one of the countries that set rules on cryptocurrencies.
According to the news of The Daily Telegraph, a daily newspaper in the United Kingdom, cryptocurrency exchanges operating in the country will have to pay a 2% digital service tax.
The UK Revenue and Customs Administration (HMRC) stated that cryptocurrencies are not recognized as “financial instruments”, and in this context, cryptocurrency exchanges cannot benefit from the exemptions granted to financial markets.
HMRC considers cryptocurrencies neither a commodity nor a currency. This means that cryptocurrency exchanges will have to pay a digital service tax.
Starting from April 2020 in the UK, 2% tax is imposed on big technology companies such as Amazon, Google and Facebook, which have a global income of over £500 million and have sales of more than £25 million in the UK. Now, cryptocurrency exchanges are faced with this tax.
CryptoUK Director of crypto assets representative Ian Taylor stated that this move is a blow to cryptocurrency exchanges, saying it will lead to higher fees for those who buy and sell cryptocurrencies.
HMRC is adamant that cryptocurrencies will not be classified as commodities or currencies.