Taxman axes VAT on British Bitcoin trades
THE BRITISH taxman confirmed yesterday that Bitcoin will be exempt from VAT in the same way as other currencies, in the latest sign that finance authorities are taking the digital currency seriously.
HM Revenue and Customs said that unlocking new Bitcoins in a process known as mining and trading Bitcoin for other currencies will not incur VAT, following months of talks with users.
The UK Digital Currency Association, which is launching this month, heralded the guidance as “some of the most sophisticated and forward-thinking issued by tax authorities anywhere in the world”.
By comparison, China has banned its banks from handling Bitcoin trade and the US is clamping down on alleged money laundering using Bitcoin.
The news came on the same day that Mt Gox, once the world’s biggest Bitcoin exchange, confirmed that 750,000 customer bitcoins and 100,000 of its own were probably stolen by hackers. At yesterday’s prices, the lost currency is worth around £350m.
Tokyo-based Mt Gox filed for bankruptcy last week after shutting its website over a suspected security breach.
The price of one bitcoin jumped above $700 yesterday, after recovering from lows of less than $400 in the aftermath of the suspension of Mt Gox.
Warren Buffett, the head of investing giant Berkshire Hathaway, is unimpressed by Bitcoin. “It’s not a currency… I wouldn’t be surprised if it’s not around in 10 to 20 years,” he told CNBC.