Azerbaijan to Subject Crypto Income to Taxation

Whether income earned from cryptocurrency should be taxed or not has been an issue with which many governments have been grappling in recent years as the crypto industry has become bigger and bigger. Even for countries that have already made their stances on crypto taxation known, the structures are still quite vague and not many people adhere to the set regulations. However, Azerbaijan has made its stance known: any revenue from cryptocurrency operations is subject to taxation.

Income Tax For Individuals

As quoted by a local media outlet, The Trend, Nijat Imanov, the country’s Deputy Director General of the Tax Policy and Strategic Research Department, made it clear that any proceeds from the trading of cryptos would be taxed by the government going forward.

Speaking at the Finance and Investment Forum which took place in the country’s capital, Baku, Imanov stated in no uncertain terms that proceeds from the trading of crypto were classified as profit tax for legal entities and income tax for individuals.

If someone bought a cryptocurrency and then sold it after its price increased, this amount is recorded as income and therefore should be [subject] to taxation.

The crypto market in Azerbaijan, whose population is just shy of 10 million, has registered consistent growth in recent months with a sizable number of people seeing it as an alternative revenue stream. The Trend further reported that the biggest growth had been registered between May and December 2017, a period that saw cryptos increase in price and popularity globally.

The Lack Of A Universal Taxation Model

As is the case with most aspects of crypto, taxation lacks a universal model. The majority of countries have continued applying a hands-off approach to the crypto industry, while others have sought to take advantage of the rising value of the industry to boost the government’s coffers. Germany is one of the countries that has had a very crypto-friendly taxation model. With Bitcoin considered neither a commodity nor a currency but as private money, any proceeds that are below 600 EUR are tax-free. The tax laws are even better for long-term holders, as any proceeds from crypto assets that have been held for more than a year are completely exempt from taxation.

Germany is not the only European nation that is enticing crypto trading through tax exemption. Denmark also employs a zero-taxation model on crypto proceeds. With the country striving to be one of the global crypto and blockchain hubs, this is definitely a step in the right direction. For others like Belarus, the tax-free model is only temporary. The Belarus government implemented a tax-free model through 2023 for any income from crypto trading and mining. The move is meant to spur growth in the crypto industry.

Other countries haven’t been as lenient. Just recently, the crypto community in Poland began organizing an online petition to protest the government’s unfair taxation model. The Polish government had declared that it would impose an 18% tax on crypto proceeds below $24,000, while any amount above that would accrue a 32% tax. The decision angered the crypto community, which accused the government of trying to stifle the development of the crypto industry.