Although the Mexican Tax Administration Service does not count on a precise regulation on crypto, taxpayers must report their earnings regularly.
Many cryptocurrency users have found a place to call home in Mexico. Through Localbitcoins, more than 11.6 million Mexican pesos (more than USD 580,000) or maybe more move through the Bitcoin exchange weekly.
In bitso, which is the largest and oldest exchange that operates in that country, there are more than 2 million cryptocurrency users who have made more than 27 million trading operations according to the same exchange.
Due to a lack of clarity of the Tax Administration Service, SAT, many users remain ignorant about the steps to pay their taxes.
Due to this situation, the Mexican media El Economista interviewed Juan Ignacio Rivero, a member of the College of Public Accountants of Mexico.
This accountant highlighted that although the tax authority is still unclear regarding cryptocurrencies, especially in the regulatory part, taxpayers have to report to the SAT, clarify and pay income on any income they generate, depending on the activity they carry out.
It is important to note that, according to the media, cryptocurrencies serve as an asset that can generate profit at the time of being sold, so when wanting to declare it before the SAT, the difference between the purchase value would have to be taxed and the sale value.
Rivero also said, “If a taxpayer buys 300 pesos of Bitcoin and, at the time of selling them, that amount becomes 500 pesos, the 200 pesos of profit that the user had will go as a tax. In the case of having a loss, users would not have to pay taxes”.
The tax specialist Elio Zurita Morales told the newspaper El Taxpayer that having the supporting documentation of the transactions is crucial to show the SAT how much value the cryptocurrency possessed at its purchase and how much it is for sale. Otherwise, the authority could presume that the total investment is income.
The Hodl is not a Reason for Taxation
Rivero also says that the hodl is not a reason for taxation: “You don’t necessarily have to face taxation anymore just for having them, you should be taxing when you have a real income. The profit gets taxed”. Regarding which regime to tax, Rivero explained that the control that best suits these transactions is the Disposal or Acquisition of Assets.
What Happens to Citizens Avoiding the Taxations
Zurita Morales, from the College of Public Accountants of Mexico, responded to the medium El Taxpayer about what happens with someone who does not declare taxes for having profits with crypto.
If the authority detects it, it will presume a fiscal discrepancy, that there is an income that avoided a declaration. So, citizens might become a creditor of sanctions, depending on the amounts, and depending on the situation.
Besides, Zurita explains that although the tax authority cannot see the amounts that a user would manage into a wallet, it has other ways to control income, such as purchases made by the user or their bank accounts taxable.
By: Jenson Nuñez
