China has reportedly started to impose a 20% personal income tax on investment profits for individual crypto investors and many Bitcoin (BTC) miners after several major domestic exchanges handed the tax authorities extensive information about some of the whales’ transactions.
This represents a shift in China’s policies towards crypto, which have previously ranged from a total ban to investigating the utility of blockchain.
The Chinese government’s views on the legality of crypto have been complex, with tax authorities and financial authorities having differing opinions.
In October 2021, China Tax News, a subsidiary of the State Administration of Taxation, published an article stating that the services previously provided by overseas exchanges to Chinese residents were “not expressly prohibited by law”, but imposing taxes on the income they obtain from China.
China has also been strict on illegal financial activities in the form of digital currencies, but, within its current legal framework, it doesn’t prohibit individuals from holding the likes of Bitcoin, with the trading of virtual currencies defined as an “invalid civil act”, but not explicitly prohibited by law.
