The Republic of Georgia has exempted general sales tax (GST), also known as the value added tax (VAT) in some parts of the world, from all crypto transactions, as reported by crypto news site on 13th July 2019. The law also makes it compulsory for all miners registered in Georgia to pay GST; however, companies registered abroad are exempted from the GST.
As per the report, Georgia’s Finance Minister Nodar Khaduri signed the bill into law, according to which traders and miners of cryptocurrencies would be charged tax in the future. The bill that has been integrated into the Georgian tax system this month. The new law first defines cryptocurrencies as:
Cryptocurrencies are digital assets that are exchanged electronically and based on a decentralized network. Their exchange does not require a reliable intermediary and they are managed using distributed ledger technology
The bill now allows people living in Georgia to convert their cryptocurrencies directly into fiat currencies to make purchases and those purchases will be exempted from GST.
The country does not allow making direct purchases with cryptocurrencies and the users have to first exchange their cryptos for the fiat currencies before making purchases. The country has the same rule for foreign currencies being used in Georgian land.
GST Exemptions on Crypto Transactions
BlockPublisher reported earlier this week when Singapore also moved a bill that proposed to exempt crypto transactions from the GST. The Inland Revenue Authority of Singapore (IRAS) proposed the regulations in a document on its website.
The bill plans to exempt all transactions done using cryptocurrencies that are used as a mean of exchange to buy goods or services on Singaporean soil. The law proposed the following changes:
The use of digital payment tokens as payment for goods or services will not give rise to a supply of those tokens The exchange of digital payment tokens for fiat currency or other digital payment tokens will be exempt from GST.
The bill has not been finalized yet, with the IRAS saying that the bill is still with the Ministry of Finance that is holding public consultations for the bill. The draft bill has been proposed by the IRAS to keep up with the world as the authority says that it wants to be on the right side of the future.
In 2015, the EU Court of Justice made a historic decision that made bitcoin exchange exempted from GST. Since then, countries have been following suit as many have exempted GST on bitcoin transactions and exchanges. Italian Lawyer Stefano Capaccioli, who specializes in cryptocurrencies and gold, said about the EU Court of Justice verdict:
The Decision is of historic importance: it clarifies all doubts and removes the confusion on the applicability of consumption taxes to bitcoin, considering cryptocurrencies as a simple means of payment and, under a VAT perspective, similar to a foreign currency
he Judgment is the practical demonstration that bitcoin needs no specific regulation, but only the interpretation of existing legislation because bitcoin does not fall in any legal vacuum.