Dáil Éireann Debate, Tuesday - 22 February 2022
56. Deputy Pearse Doherty asked the Minister for Finance if his Department has considered developing a strategy with respect to cryptocurrency and non-fungible tokens given concerns regarding their respective use for purposes of tax avoidance, tax evasion and money laundering; and if he will make a statement on the matter. [9699/22]
View answerI have indeed considered whether specific dedicated actions or strategies are required in relation to cryptocurrencies and non-fungible tokens, and not only the tax or money laundering aspects.
No separate strategy is required currently in respect of cryptocurrencies and non-fungible tokens in order to prevent tax evasion, avoidance or money laundering, on two counts:
1) Current tax legislation principles apply to cryptocurrencies, as advised by Revenue on December 16th 2021: the direct taxes applicable to cryptocurrencies are corporation tax, income tax and capital gains tax.
The relevant legislation and case law must be applied to determine the correct tax treatment. Each case must be considered on the basis of its own individual facts and circumstances. For example,
- for businesses which accept payment for goods or services in cryptocurrencies there is no change to when revenue is recognised or how taxable profits are calculated
or
- where there is an underlying tax event on a transaction involving the use of a cryptocurrency, the requirement in the tax code for a record to be kept of that transaction, including any record in relation to the cryptocurrency, also applies.
2) In relation to money laundering, Ireland transposed the 5th anti-money laundering Directive (5AMLD) into Irish law by way of the Criminal Justice (Money Laundering and Terrorist Financing) (Amendment) Act 2021 ("2021 Act") and the provisions of the 2021 Act that relate to Virtual Asset Service Providers commenced on 23 April 2021.
The changes in the Act resulted in virtual currency exchange platforms and custodian wallet providers being in-scope of the anti-money laundering (AML), including rules for the performance of various client due diligence checks and other requirements when onboarding new customers.
VASPS in Ireland must adopt controls and procedures to counter money laundering or terrorist financing (ML/TF) risks, report suspicious transactions and become registered with the Central Bank of Ireland.
