In a recently held meeting with a group of UK traders, HM Revenue & Customs announced that it would not charge the 20 percent VAT tax on trades. Currently, entrepreneurs pay 20 percent VAT which have been a bone of contention for thousands of traders. According to the complaining traders the VAT is making their businesses globally uncompetitive.
Paying a heed to what the traders demanded HMRC went a step further and said that it would not charge the tax on their margins either. Coming at a time when Bitcoin is facing one of the biggest collapses in its six year life as Mt. Gox goes bankrupt, the measure on the part of HMRC is definitely an appreciable development.
According to some observers, the VAT has been a major obstacle that discouraged many businesses. They believe that the great decision on the part of the UK authorities, who see Bitcoin as an innovative technology that can help the economy, is a welcoming development.
However, the European Banking Authority warns that consumers are not protected by any refund rights under EU law when using virtual currencies for commercial transactions. A similar warning was issued by India, China and some other countries.
Decision comes at the Time When Mt. Gox Collapsed is Welcoming Development
The collapse of Mt Gox, one of the virtual currency’s leading exchanges, wherein it lost close to $500m of customer deposits has shaken the investors. At a time when the US and Japanese governments are taking cognizance and looking the case of Mt. Gox, the UK’s welcoming approach to the digital currency has surprised many observers.
The latest addition in the list of the government that has warned their citizens against Bitcoin is Vietnam. However, the UK seems unfazed to the extent that the latest debacle in Mt. Gox too does not seem to have any impact. Bitcoin is not only receiving criticism after the collapse of the giant Bitcoin exchange but also flaked for extreme fluctuations.
Bitcoin does not have smooth passage; it is not yet accepted as a currency. One issue that Bitcoin faces is that governments around the world don’t have any clarity on Bitcoin. Many of them are concerned about the nature of the digital currency. Some of them are skeptical about the concept of Bitcoin and other similar digital currencies.
However, as Bitcoin is gaining foothold gradually and businesses hoping to profit from a small but growing economy have started lobbying, some governments seem to have relented. For instance, Singapore has quite friendly policy towards Bitcoin. Recently, the Singapore government issued tax guidelines for Bitcoin.
To contact the reporter of this story: Deepak Tiwari at firstname.lastname@example.org