Cryptocurrencies to evade taxes

Ecuadornews:

Cryptocurrencies are virtual currencies, which like any other paper or metal currency, are used to acquire goods or services; their particularity is that they are beyond the control of governments and financial institutions.

Does this work or is it a project? Works! and it is enough for two people to agree that a payment for goods, services or execution of works, be with cryptocurrencies (bitcoin, bitcoin cash, ether, lite coin, ripple); for what there is a digital book (blockchain) in which all transactions are recorded (https://bitcoin.org/es/).

For its part, we have the Foreign Exchange Tax, which taxes the transfer of foreign currency abroad. And the system in practice is sustained and works for the IRS,by the withholding agents, which are the institutions of the financial system.

The Foreign Exchange Tax generated in 2017 revenues for the State in more than $1,000 million. What would happen if an Ecuadorian company makes transfers abroad with cryptocurrencies instead of dollars? Does Foreign Exchange Tax pay?; the first thing is to define if the cryptocurrency is a currency, that is, if it is an instrument accepted as a means of payment.

On this point, the Central Bank indicated that “(…) bitcoin is not a legal currency and is not authorized as a means of payment of goods and services in Ecuador, as established by the Monetary and Financial Organic Code”; with this it is clear that the bitcoin is not a currency (it is not legal) and as such, it is not subject to the payment of the Foreign Exchange Tax.

Additionally and operationally, there is no one who takes charge of the collection of the Foreign Exchange Tax for payments in cryptocurrencies, since the institutions of the financial system are in charge of their collection, discounting the amount of the tax from the value of the transfer. Which is not possible, under the same conditions, with cryptocurrencies, since they are not bankized.

Therefore,the Foreign Exchange Tax is in a situation not only compromised in its collection growth, but even in a loss of it, by taxpayers who use cryptocurrencies as a means of payment, leaving them in a situation of discriminatory treatment and in violation of the principle of tax equity to tax payers. Therefore, a reform in the Foreign Exchange Tax is needed to give an equivalent treatment in the operation with cryptocurrencies versus doing it with dollars. (O)

Source: https://www.eltelegrafo.com.ec/noticias/punto/1/criptomonedas-evadir-isd