Senate Economics References Committee conducted a review of bitcoin and determined that it should be considered as any other currency when it comes to application of Goods and Service Tax (GST).
The decision of Senate Economics References Committee conflicts with Australian Taxation Office’s earlier ruling in 2014 which had declared digital currencies to be commodities for which GST regulations are applicable along with additional taxes.
The ATO’s guidelines created an uproar among the Australian bitcoin community and bitcoin startup ecosystem. Many Australian startups had already started contemplating about their next moves, which included them shifting their base of operations away from Australia.
The Committee’s had received submissions from various bitcoin businesses including Ripple Labs mentioning the effects lack of uniformity in global bitcoin regulations can have on fintech sector. The ATOs stand on bitcoin was acting as a barrier for bitcoin based businesses to scale up. Especially with digital currency and the technology behind it gaining popularity among individual and institutional users across the world, it is essential to create a favorable environment that fosters innovation in digital currency sector.
Few months ago, Switzerland became the first country to do away with VAT for bitcoin transactions. Even United Kingdom has