Taxation for cryptocurrency, Non-Fungible Tokens (NFT) in Taiwan

2022-02-08 17:51:39


Taxation for “cryptocurrency, Non-Fungible Tokens (NFT) such as dog-themed crypto Shiba Inu SHIBUSD, Bitcoin BTCUSD, Ether ETHUSD, Meme token Dogecoin DOGEUSD or any virtual currency in Taiwan

According to the Ministry of Finance, the cryptocurrency might be classified into two types of assets, securities and non-securities.

The taxation of cryptocurrency is mainly divided into two types, one is the cryptocurrency, Security Token Offering (STO), with the nature of securities approved by the Financial Regulatory Commission, the other cryptocurrencies such as dog-themed crypto Shiba Inu SHIBUSD, Bitcoin BTCUSD, Ether ETHUSD, Meme token Dogecoin DOGEUSD are not non-securities

Thus far, eight cryptocurrency platform operators have registered with and supervised by the Financial Supervisory Commission (FSC), and FSC has not approved any cryptocurrency to be STO.

If the cryptocurrency does not have the nature of securities, not STO, then the cryptocurrencies are treated as property for income tax purposes in Taiwan, and investors are required to pay income tax on capital gains incurred when they dispose of their crypto. 

If it is an STO, the purchase and sale is only subject to Security Transaction Tax. The logged gain in STO trade is exempt from individual income tax, but a company must incorporate those gain into the basic income of the company to levy the Income basic tax.

What is Security Token Offering (STO)

In response to Fintech’s innovation, and as a means of improving the convenience of fund raising for innovative enterprises while helping them fulfill the diversified requirements of fund raising, Taiwan Financial Supervisory Commission has defined and announced the Security Token Offerings (STO). These securities, which are initially open to any issuer with an amount of funds raised less than TWD 30 million, are exempt from obtaining an effective registration with the issuing of securities according to Article 22, Section 1 of the Securities and Exchange Act.

Issuers are obligated to prepare prospectus, platform operators are required to apply for and acquire a special license, and a single-trading approach platform shall be adapted. Effective information security mechanisms shall be established and the issuer’s STO shall be approved under the regulatory structure to conduct price negotiation as a securities dealer. These securities dealers shall also urge responsibility on the issuer for any information disclosure. In addition, in consideration of the high technical content and high risk of STO, a tiered approach has been adapted and only professional investors are permitted to invest in STO fund-raising projects. In order to control further risk, a limit has been set on the number of natural persons from professional investors who wish to invest in STO fund-raising projects.

The “Taipei Exchange Rules Governing the Operation by Securities Firms of the Business of Proprietary Trading of Security Tokens” is used to oversee the issuing and trading of STO, as well as the management rules regarding finances, internal control systems, and operators of the securities dealers operating in the business. The personnel concerned shall also comply with these regulations.





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