Costa Rica seeks to become a hub for digital assets and eliminate crypto taxes
To turn Costa Rica into a digital currency haven, lawmakers are working to eliminate all taxes on digital assets, including BTC. Johana Obando introduced a bill to Congress that would eliminate digital asset taxes. According to Obando, the MECA (Cryptoassets Market Law) would protect individual virtual private property, self-custody of crypto-assets and decentralisation.'
The economy is looking up for crypto and Fintech businesses in Costa Rica after legislator Carlos Obando introduced a bill to make them legal. According to Obando, this legislation, if passed, will promote digital economies and crypto asset use.
According to the MECA, digital assets will be able to flourish without severe distortions from the central bank but will live in 'perfect concord'. The law will define virtual currency and prohibit the government from taxing them.
Investors will not be taxed when using digital assets to pay for goods and services, and Costa Rica will protect those with digital assets in cold storage. The legislation will cover miners as their assets will not be taxed as they are mined in the country.
Trading and investing digital assets will result in taxable income under the bill. The bill has earned support from Congressmen Luis Diego Vargas and Jorge Dengo, although the nature of the bill's resistance is unclear.
Digital asset taxation around the world
Virtual assets are taxed in different regions around the world. The elimination of taxation for virtual assets has been interpreted as one that may bring the country closer to El Salvador's path to legal tender for BTC.
Virtual currency taxation has undergone uneven development in different laws around the world. In some countries, the tax regime is gentle, while in others, it has been used to restrict the interest for virtual assets.
India has one of the most complex digital currency tax policies. The Indian Finance Minister imposed a 30% tax, an applicable surcharge, and a 4% surcharge on realised profits, while Portugal, one of the countries with almost no taxes, is contemplating taxing the industry.
In the United States and the European Union, the law mandates that taxes be paid on digital assets based on investing or trading them upon sale.