Albanian authorities are finalizing legislation that subjects crypto-related income to taxation. Currently, the public is scrutinizing the proposed legislation to make it inclusive. Should the public call for its adoption, the state will begin taxing crypto-related income in 2023. According to the schedule, the state will begin the taxation as early as January.
According to reports, Albania’s new income tax bill will allow them to tax crypto activities. Besides, the government has aligned several laws on cryptocurrency. Albania is becoming strategic in having total control of the crypto industry in the country. This follows a series of accusations of money laundering through crypto.
Albania subjects regulations to public participation
Now, the special tax legislation is available for feedback from the general public. The law aims to tax crypto ownership and income earned from virtual assets. According to the proposed law, the authorities have a definition for Virtual assets.
They define it as “a digital form of a value that one may deposit, trade or exchange in digital form.” Also, if one can use it for payment or investment reasons or as a medium of exchange, it qualifies as a virtual asset. However, virtual assets exclude central bank digital currencies (CBDCs).
Many monetary authorities worldwide are constructing digital versions of their national fiat currencies. Some notable names developing CBDC include the USA, the EU, China, and Russia. However, Albania remains silent on the CBDC products.
According to the law, mining is an activity that uses processing power to confirm transactions and get virtual assets in exchange. Several law enforcement agencies have been targeting unlawful miners in Albania. Moreover, the country has filed several charges against some of the operators of those sites. Yet, the mining of cryptos has remained a legal gray area in the country.
Under the proposed law, any income from a firm’s activity will become corporate income. It doesn’t matter whether it came from cryptocurrency transactions or mining. And if the beneficiaries are private individuals, they will be subject to a capital gains tax of 15%.
AFSA to handle expansion of the Crypto regulatory framework
The Albanian parliament tasked the Financial Supervisory Authority (AFSA) to make the new crypto law. Besides, they were to oversee the approval of the law for execution. The Senate set the target date of this venture to December 2022. The results show that the Albanian policy approves crypto trading channels. But, the country does not yet have licensed businesses actively trading cryptocurrencies.
Two years ago, Albania passed the “Financial Markets Based on Distributed Ledger Technology” law. Critics have questioned whether Albania, which is still an EU hopeful, is capable of regulating its crypto sector. Most people hold that crypto is fuelling money laundering and doubts Albania’s potential to regulate that. While many have welcomed the legislation, others have questioned whether the nation can do so.
The legislature referred to a recent report published by the Committee of Experts on the Evaluation of Anti-Money Laundering Measures and the Financing of Terrorism (Moneyval) of the Council of Europe. This report recommended more steps on the risks associated with cryptocurrency. The initial two regulations for implementing the crypto markets law got approved by the AFSA in November 2021. These laws included restrictions for entities working with digital assets.
Albania has been busy with policy developments. They adopted the Financial Markets Based on Distributed Registry Technology in 2020. Yet, lacking all relevant ordinances means its complete implementation is still a long way off.
Crypto activities in Albania require licenses under the law. On the other hand, blockchain-based financial systems are subject to regulatory scrutiny. Anila Denaj, the Finance Minister, held that the purpose must fully utilize the advantages of modern technology. She explained that it also took into account the many risks inherent in the business.