• Mexican Auditor Warns: Pay Tax on Bitcoin Profits or Face Penalty

  • An auditor has warned that Mexicans must pay taxes on bitcoin (BTC) and altcoin trading gains or risk being labeled as money-launderers.

    Fidel Ortiz, the director-general of the accounting firm FIXAT, claimed that BTC investment would increase in 2020 and that, despite the fact that the sector was largely unregulated, many traders were currently evading the requirement to pay tax on their profits.

    He stated that those who conduct cryptocurrency business must register with tax authorities in order to “avoid being considered as money-laundering operations.”

    In Mexico, crypto tax is a bit of a grey area. Although the government and central bank have yet to take an official stance on taxing traders, many tax and legal experts agree that the spirit of the current tax code requires traders to declare their profits as intangible assets. Some argue that the current VAT tax law applies to crypto trades.

    In addition, according to a Lexology post by the Guadalajara-based legal firm Ramos, Ripoll & Schuster, “Mexico has no special tax framework for cryptocurrencies.” However, it is expected that one will be established in the future.”

    The lawyers went on to say:

    “The absence of specific regulation does not suggest that taxes on gains and losses should not be paid or that value-added tax is not applicable.”

    Meanwhile, Ortiz added that, while bitcoin is “not yet controlled by any government or bank” and, “in the case of Mexico,” is not subject to any “specific regulation,” profits are “taxable.”

    He stated, ”

    “It makes no difference if [traders’] income is generated by using a digital platform with servers in other countries. The obligation to pay taxes remains and must be met in order to avoid any fault or omission in the eyes of the financial authorities.”

    And Ortiz cautioned that people who do not register their bitcoin investments will be in hot water.

    He claimed that tax officials would invariably “find a fiscal imbalance,” recognizing that merchants were using “undeclared income.” This, he warned, might result in punitive penalties based on the amount of unreported funds accumulated.

    The same firm earlier this year warned that tax evasion in Mexico reached USD 69.8 billion last year, equivalent to 6% of the country’s GDP.

    According to FIXAT, higher-income taxpayers accounted for a stunning 52 percent of all tax evasion in Mexico.

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