# Taxing Crypto in Colombia by Luis Carlos | Devcon Bogotá

- Channel: [Devcon](https://streameth.org/devcon)
- Date: 2023-10-07
- Duration: 25:26
- Watch: https://streameth.org/watch/yt-NDiGNkf3Hy0
- YouTube: https://www.youtube.com/watch?v=NDiGNkf3Hy0

## Description

Visit the https://archive.devcon.org/ to gain access to the entire library of Devcon talks with the ease of filtering, playlists, personalized suggestions, decentralized access on Swarm, IPFS and more.
https://archive.devcon.org/archive/watch/6/taxing-crypto-in-colombia/

The director of the Colombian Tax and Customs Administration will present a document unifying the current rules about the taxation of digital assets in Colombia and will discuss gaps in the current normative framework. He will also invite feedback from the community on how to address these gaps.

Speaker(s): Luis Carlos
Skill level: Beginner
Track: Opportunity & Global Impact
Keywords: Taxation

Follow us: https://twitter.com/efdevcon, https://twitter.com/ethereum
Learn more about devcon: https://www.devcon.org/
Learn more about ethereum: https://ethereum.org/ 

Devcon is the Ethereum conference for developers, researchers, thinkers, and makers. 
Devcon 6 was held in Bogotá, Colombia on Oct 11 - 14, 2022.
Devcon is organized and presented by the Ethereum Foundation, with the support of our sponsors. To find out more, please visit https://ethereum.foundation/

## Transcript

foreign [Music] hi everyone I'm here to remind you that even though uh crypto isn't in no type of crypto is currently a form of money in Colombia that doesn't mean you don't have to pay taxes on it um that's a joke um yeah no but even even you know because of this we want to make sure that the rules for paying taxes on crypto and crypto related activities are are clear uh we're taking steps to make that uh make make things even clearer than they currently are uh a few of you may have wondered especially if you um even if you have just uh used a crypto platform if you are if you have to pay any taxes on the gains that you make from your Investments or if you run a platform I don't know if the representatives of the the exchanges uh in the country are are here uh we would like to make sure that you know exactly what rules you have to to follow briefly speaking even though crypto is no it's not legal tender in Colombia uh it is considered for tax purposes uh and intangible asset which uh which basically follows the the the treatment that other jurisdictions give to to crypto and in general to many digital assets in Colombia you have to um you know you you have to uh fill out a tax return as just uh uh you know a natural uh person you uh you have to declare uh your net worth which is uh a very particular thing to the Colombian tax system uh many of you guys probably have heard the debate in Congress about a taxation of your net worth how it's calculated uh and so just you know just like if you're curious about this you you would basically have to to tell uh us to tell the tax administration the value of the crypto at the the passive value that you acquired it on on the day when you acquired it you just have to tell us there's currently no taxes on on your net worth uh there have been in the past but this is only for informational purposes and everything else is essentially a capital gains taxation if you so if you if you buy crypto or other assets right uh if you buy nnft and it increases in value you don't have to pay any taxes until the moment when you sell it so if you sell it you make money on it the difference between the price which you bought it and the price that that you bought for it uh is the uh is the basis on which you have to pay a rate that rate will depend on whether you have held the the assets for uh two years uh or or more if you have held them for more than two years this is the roughly speaking the capital gains tax it's called Uh ganancies in in Colombia um it's currently a 10 tax rate if the tax reform bill that we're working on goes through it will be at 15 of the the appreciation uh if you sell the asset before two years then you just have to pay the the ordinary rate which is a progressive uh taxation scheme it starts at 19 uh at very high levels of income it goes all the way up to uh 39 uh which is much like what you would pay in in the United States for uh ordinary income as well you may have wondered uh I know because I have uh if uh if you're in an exchange and you buy and sell crypto right maybe you're just playing around with uh uh any type of cryptocurrency you've made uh and you sell it to someone right and if you if you like to think about tax issues which some people do you may Wonder does this pay vat though the value-added tax uh Eva in Spanish there are activities such as exchanges that are that do not pay uh vat uh it so when it comes to intangible assets uh like uh like crypto then as long as they don't have uh an intellectual commercial industrial value so this is more like patents right like if they don't have that that added value then you're not responsible for paying vat uh however if you're selling say uh at least some sort of of nfts there may be vat to be be paid so especially if you're thinking of running a business that operates buying and selling uh crypto nfts other types of uh digital assets these are things that you may want to take into account and we want to make this easy for those paying taxes right you have to pay them the least we can do is make it easy for you so uh we are here to to help uh I have uh I've given instructions to uh the the the the subdirectorate in charge of uh Norms you know interpreting the the tax norms for specific cases in specific Industries to compile all the concepts we have we have issued about crypto in a single document and uh but also we are here to collect the questions that you may have and we want to issue an official concept about this we want to do this both in Spanish and in English we want to have a clear rules for those coming from abroad to to invest and even though uh I think we're all excited for the uh for the closing event at 3 30. uh we are here to to take questions uh uh yeah sure so you're mentioning that we would have to pay taxes if I you know purchase a Bitcoin let's say it goes up in price and then sell it for fiat currency but if I were to buy a Bitcoin and then swap it to another currency another digital currency let's say ethereum and the price was well technically created a taxable game how would I pay that tax would I pay it in the value of the local fiat currency would I pay it in one or the other intangible ads assets how how would you do that that's a great question um because currently uh ether and then at Bitcoin are not currently considered uh currency in Colombia uh and you're just swapping assets um uh it may depend but you would probably just have to pay uh the time you sold the uh in your example the ethereum for Fiat um and then I think that also raises the question of what do you do if you uh if you buy something in crypto right like if you if you buy a house in crypto like what would you do how does it work uh and then in in that case you would have to take into account the the value at which uh that that house uh is fairly valued and the value of uh of your asset and then that difference would be the basis for for taxation so you never specified whether for whether it was first in first out which is if I had bought Bitcoin and maybe I put it off to the side for long-term storage or ethereum whichever asset and then later I start trading with other assets over here so first in first out would say that the very first purchase of the asset ethereum let's say was at a hundred dollars and now it's at fifteen hundred dollars it doesn't matter my trades over here it's first in first out do you understand the first stand person right right yeah so you never specified whether there's a first and first out rule that you have or not I think the what's really helpful for uh for thinking all this is that for all practical effects and purposes in Colombia uh crypto assets are intangible assets so you would handle uh say inventories uh in the same you would follow the the current accounting rules right um uh in in Colombia this uh I don't know what uh accounting rules you're most familiar with but we wouldn't be using a US U.S gaap but we would be using IFRS rules for for accounting uh so so that's what would apply it would apply in in this case uh I I I think uh we probably in the concept and in the document that uh we will uh post uh I will post it on on my Twitter account uh uh to to start clarifying some of those things but mostly to invite questions like this so that we can we can give you specific detailed answers um yeah what about the crypto you gain like paying on services so for example I have a income right on crypto how should we tax that yeah uh currently we so uh you you can be paid in in in and things other than Fiat in in Colombia and that's uh that's already regulated right you could be paid uh uh so some people are paid in uh or at least partly in education for their children right like their uh their firm pays their children's tuition or they give them uh access to uh country clubs uh which have a certain value and all those payments in basically and stuff uh the same rules uh as for payments and income and then and excuse me and Fiat apply so you would basically have to uh tell the the government what the uh so what's the the fair uh Market Fiat value of the crypto and that would be the the basis of the tax you pay but you would pay exactly the same as if you were paying um as if you were paying uh if you were being paid in uh in in Fiat so suppose yeah suppose you um so so you work for a company that's paying you in in crypto then um they pay you uh in the Italian government this is how many pesos this was worth then you pay taxes on the basis of that but then your crypto continues to gain in value um if you if you sell it to buy something something else then at the moment of selling it you would pay uh an additional tax on on those capital gains basically yeah and if you you know if you found someone who was willing to to sell you stuff directly uh for for crypto then uh this this follows the same There are rules and regulations in Colombia that apply to uh exchanges of stuff right like if you if you trade uh I don't know if you trade uh a house for uh five cars which is something that people sometimes do you would you would apply the same rules in the tax code some wallets have uh debit cards if you're given by Visa or Mastercard so how do you make a chain of taxes whenever you have a wallet that lets you save in usdc or whatever and then spend it in retail let's say in a cafe I think there will be taxes along the way but who is paying what in that change so um I'm sorry the question is you have uh uh I don't have one just okay okay yeah hypothetically there is a wallet with debit cards so how do they pay taxes along the way when you have debit cards uh the payment processors and there is a crypto wallet involved right um yeah currently uh none of that so uh those are things that would have to be regulated by the uh by the financial Authority uh the the Colombian SEC the superintendency of financiera uh because uh the regulation is still to come uh you would basically not pay a lot of things that you pay in the current Financial system there's uh you may be aware that that in Colombia there's the cuatro per meal which is like a 0.4 percent tax on financial transactions uh that would apply only when you convert that into uh uh you know into into VR and into uh the traditional Financial system uh but that's that's a great idea to raise her anyway I'll take that one with me um yeah I'm just kidding uh but not entirely yeah what's your position about using any cryptocurrency as a collateral to have a pesos or use dollars as a collateral uh like for uh getting a loan or yes exactly yeah uh this is uh this is uh still something that has to be regulated by the financial Authority uh so uh uh I suppose you could sign a private contract uh and then you give this as a collateral as long as someone else accepts it uh you you could sign you could sign a contract that that specifies it right yeah right okay so in the case of uh of D5 yeah uh we're actually this is one of the questions that that we currently want to to address in detail uh because it's it's a question that we've been uh yeah we're being asked a lot so so we're working on on issues related to to D5 for sure your offer your office published a document like four months ago the former director regarding this uh taxi song crypto that that document is still running we have to apply that it's it's still in force uh there were roughly 25 documents that we had published answering various questions so what we're doing is we're compiling all of them in a single document so that uh you have everything in One Source but nothing has has changed we just want to make this more accessible and like I said uh some of these you know these questions and more if you guys want to uh you know talk to to the the to uh uh lawyers from from Beyond that that came here uh with me um we will make sure to address them we want to give the to have a comprehensive treatment of of how to handle these tax issues to to give you know to give everyone more more certainty and instability and and hopefully not have to pay like very expensive Consultants when we can do it for free for you the context of of my question is because the the former director yeah said in incarnate called noticias that people that is that need to declare their crypto they have to do it from 2017 and they have to pay the maltas from those years 17 18 19 20. and what do you think about that because the incentives are maybe not aligned and people don't want to declare something to be a bad person and paying those multas you know right um as part of the uh the the tax reform bill that uh we are um you know uh uh shepherding through Congress we are trying to make a lot of those fines uh not just for crypto specifically but for a lot of uh different businesses and and also just regular people a lot more understanding of when people are not really at fault and we want to focus on actual tax evaders uh the process is still ongoing so uh as I said we we welcome all feedback that that you may have about the permissions that we have already included in the bill and what else could be could be useful one thing that uh we uh we have gotten a lot of questions about has to do with whether we will accept taxes uh in crypto uh it's it's something that we as of as a tax administration can can do if given legal Authority by Congress we can we can handle it we think it's actually very interesting if uh you know if a firm or if a person wants to be associated with a specific wallet or sets of wallets because that actually as you guys know a lot of people still think that that crypto is cryptic and that you can't trace stuff we're actually interested in the traceability of a lot of uh of the cryptocurrencies and that it that can only be uh good for us as a tax administration so we're very open to all of these proposals uh talk to your Congressman or congresswoman there's still time to introduce some Provisions here uh the first one is we've talked about a lot of taxes right but what's your truly Vision about crypto like uh would you would you be considered as a pro crypto person or what are you are you at the tractor um that's one and the other one which more question that I always ask do you hold any crypto do I what do you hold any crypto I've I've held it yes yeah oh no for sure I um I mean look I think it's a technology that's here to stay uh I think it's promising I think the I think there's a lot of misconceptions about crypto I think we should help everyone understand that this is a promising technology I I look forward to the forthcoming regulation that various other government agencies or which I have no control I should say that uh will will issue at some point I think it should be sooner rather than later I think there's uh one of the developments that that I find most exciting is uh uh Central Bank issued you know digital currencies I uh I I was excited like I suppose many of you were when the Central Bank announced that they are studying the the issue I think uh I think I think only good things can come from uh from from this industry okay I have another question so it's more about stable coins and usdt usdc so if I get my pesos and always convert them into US dollars or well in this case usdc or usdt and then I when I need the money back in Colombia I transfer them back to my account what would be that tax incentive like implications there because you said like it's like buying dollars you know Cambio and then just like either spending in abroad or just having them in your house or whatever so what would be the implications there yeah so uh something like like usdt or uh other stable currencies uh stable coins are they are not legal tender uh here or anywhere so they are uh under Colombian legislation and and then rules uh they are considered uh just intangible assets so the way it would work is say you so suppose you you buy I don't know you uh like you go through a whole process right you deposit some Pesos into a local platform you use it to buy uh Bitcoin which then you in a local platform which then you transfer to a platform abroad and you use it there to buy some usdt and then you do some more stuff with it and then you bring it back the way it would work in terms of uh of it being taxed is you there's a certain amount of in pesos that you paid uh at the the exchange rate the official exchange rate of that they uh um and then when you transform it back into Pesos at the very end it's the difference between the pesos you got at the very end and the passive value of the original asset that's that would be the the the capital gains so to speak uh you've stated your position very clearly about the the crypto coins and all these coins that are native natively digital but there are also other type of tokens that represent for example real life assets such as houses and other kind of things uh is your take the same for those types of assets that have a real asset like as an underbuying value an underlying value I'm sorry in real life but they're just represented digitally I like the technology uh look I just run the tax administration like those are issues for the uh for for various government entities right like uh I think it's exciting to uh to see how uh you know ownership Registries uh would work uh how the financial regulation really is what uh as we all know uh is necessary for uh for this industry to to have a more solid footing uh I and I do hope and I know that that the people involved in this uh understand the the issue and they're working towards uh making things like that possible uh I think I think in general it's an exciting technology and I I also think that uh we we still we're still trying to figure out all the possible ways in which uh the technology can be used so I I'm sure there's more to come and then those are good examples of what we could see oh the taxation okay so when you have underlying assets um well um in in in that case yeah basically the difference between the peso price when you invested in the peso price when you finally sold it that's that's what will be taxed and it will be taxed as uh uh either capital gains or ordinary income [Music] meaningless you mentioned the cvdc and there is a incentive for the tax authority to look everything that the citizens do for tax purposes in in that sense what do you think what is your position about the privacy of of the citizens what is the balance between knowing and taxing what they do and knowing a lot more that would you need to to know I think that's uh that's a question for uh for Colombian Society to answer as a whole uh I'm going to be perform honest uh from the point of view of the tax administration we're interested in in the traceability of transactions especially given that the Colombian economy uh is so informal and so many people use cash I think for instance uh uh we you know if we could if we could offer uh people a digital currency that is more convenient than cash even safer than cash right like if you're like if someone steals cash from you there's no way of getting it back if it's if it's highly traceable you you may be able to know what happened to it afterwards right uh so those I think I think there are trade-offs in life uh and and I think it would be particularly interesting for everyone involved to have a digital currency that is not 100 Anonymous that can be traced but that also offers extra safety beyond the the safety that that cash can give you yeah I think my time is up and uh we probably want to go out there but uh thank you for your questions um uh Alfredo and uh Stefania are here to take to collect some more of those if you uh and uh yeah we will be collecting them and Publishing an official document uh answering them so make sure to ask absolutely everything that you want to ask and this is not the only yeah like um they will be happy to share uh contact information with you so that we can maybe set up a round table between Dion and the industry and and start clarifying some of these questions thank you very much [Applause]