In Pakistan, a proposed law would like to introduce a taxation of at least 15% on profits from cryptocurrency trading. The tax would bring around $90 million into the state coffers.
Pakistan and the new taxation on crypto trading
After threatening a complete ban on cryptocurrencies in the country at the beginning of the year, due to the many scams caused by an almost absolute deregulation of the market, the government and Central Bank now seem to be abandoning this hypothesis.
According to some local media reports, the government is considering a new tax regime on profits from cryptocurrency trading.
According to some estimates, in fact, compared to the numbers recorded by the crypto market in 2021, a 15% tax on all profits from trading in digital assets in Pakistan would bring about 90 million dollars into the state coffers.
Last year, total transactions in Pakistan reached $20 billion. The profit earned was about $650 million.
Evidently, looking at these numbers, the government must have thought it more appropriate to regulate the sector. And the first step should indeed be a new transaction tax regime for digital assets.
In 2020-2021, the country saw a 711% increase in cryptocurrency adoption. According to the Global Crypto Index Adoption, Pakistan ranks third, after Vietnam and India, in cryptocurrency adoption among all countries in the world.
According to some newspapers, the country’s leading cryptocurrency exchange Rain has in recent days called on the government to urgently draft a new cryptocurrency tax law.
Crypto regulation around the world
Zeeshan Ahmed, Country General Manager Rain Financial Inc, during a discussion with reporters on the role of cryptocurrencies in the economy, said:
“The US and India are collecting billions of dollars through a 30 percent tax on the profit earned from crypto trading. We can start with a 15 percent tax”.
Atika Lateef, Director of Public Policy Rain Financial Inc, who denoted how India is already moving in this direction, said:
“This tax clarification will encourage investors and companies to operate, as well as move the industry towards a more regulated environment, minimizing bad actors or players”.
During the Union Budget 2022, Finance Minister Nirmala Sitharaman introduced a 30% flat tax on all gains from the sale of digital assets, including cryptocurrencies.
According to research, more cryptocurrencies are held in Pakistan than foreign exchange reserves.
According to other estimates, the actual total amount of crypto in Pakistan could be far higher than the official figures, as many citizens purchase coins through peer-to-peer deals that mostly remain unreported.
It is also for this reason that FPCCI President Nasir Hayat Magoon has urged the government to urgently draft clear regulations on cryptocurrencies so that people can cash and trade their cryptocurrencies in the country instead of abroad.