Bitcoin exchanges will not be exempt from the UK’s digital services tax, according to HMRC, and are also not qualified as money.
Cryptocurrency exchanges have been informed that they are exposed to the charge, as the digital asset “are not financial instruments” which leaves exchanges unable to claim tax returns on them, The Telegraph first reported.
The digital service tax, which was introduced last year, was hauled in to ensure technology giants such as Google, Facebook and Amazon dish out more dough to the Exchequer.
The law puts a two per cent levy on online marketplaces, search engines and social media platforms that have secured a revenue of over £500m and UK sales of more than £25m.
However, the tax is expected to be phased out, following the G20’s tax deal in July.
The HMRC said: “There are a wide variety of crypto assets, each with different characteristics.”
“It is unlikely that crypto asset exchanges can benefit from the exemption for online financial marketplaces.”