V2I5P104

Double Taxation in Cryptocurrency Transactions

Navya M^1*, Dr. Parul Tandan²

Abstract

Cryptocurrencies have emerged as groundbreaking financial instruments, but their regulatory handling, especially taxation, is disjointed and varying across geographies. Double taxation of cryptocurrencies has emerged as a multifaceted phenomenon whereby the same transaction or income is taxed multiple times because of differing legal categorization and taxation regimes. With a focus on major economies like India, the United States, and the European Union, the study investigates how differences in the treatment of cryptocurrencies as property, commodities, or legal tender lead to overlapping tax burdens like capital gains tax, GST, VAT, and withholding taxes. Through mixed-methods research integrating surveys and interviews, the research finds that double taxation had been encountered by more than 50% of the participants, with greater frequency found among veteran investors and high-income earners. The study pinpoints significant challenges, regulatory uncertainty, complexity in compliance, and investor confidence erosion and suggests methods for addressing them in the form of international tax agreements, uniform global tax regimes, and blockchain-based systems of compliance. This research has the objective of informing policymakers, investors, and companies on approaches to equitable and innovation-accommodating cryptocurrency taxation regimes.

Keywords:

Double Taxation; Cryptocurrency; Transactions; Income