India’s uncertain position on virtual assets and regressive tax rules are prompting cryptocurrency trading platforms to relocate to friendlier countries.
The co-founders of Indian cryptocurrency exchange WazirX, Nischal Shetty and Siddharth Menon, have relocated to Dubai with their families, according to the Indian Express. Firms such as ZebPay and Vauld have also relocated to Singapore, while CoinDCX now has a Singapore branch.
The current worldwide cryptocurrency meltdown, combined with rigorous rules and regulatory changes in India, has impacted the business, which peaked in November 2021.
Many of these sites have now suspended payment, deposit, and withdrawal operations.
The Indian Express quoted an unnamed top executive of one such exchange:
“We are in a bear market right now…many people who are building crypto and Web 3.0 products are moving to jurisdictions with more policy clarity,”
According to blockchain data platform Chainalysis, India placed second in terms of cryptocurrency adoption in August 2021. That, however, was insufficient.
Earnings from crypto-asset transactions and transfers of non-fungible tokens are taxed at up to 30% in the country. It also deducts 1% as tax on income in excess of 10,000 rupees ($127). Crypto and digital asset gifts are also taxed.
In Dubai, there are no such levies. Aside from a 5% VAT, earnings from digital properties are essentially tax-free. For these reasons, the city has emerged as a destination for crypto investments.
Singapore too does not tax cryptocurrency purchases. However, the tax treatment is determined by the purchaser’s intent.
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