Monthly Archives August 2021

Ratas: Estonian tax system needs to be modernized | New

“The tax system is an instrument with which we can reduce inequalities and poverty and increase the standard of living for all and the competitiveness of businesses. The overall tax burden determines the volume of public goods,” said Ratas, opening the conference titled “Our choice – what kind of Estonia do we want?”

Ratas added that the structure of taxes, that is, the share of tax revenue collected through the taxation of production, income, consumption and property, also has an important impact.

“We remember how many people doubted the reform increasing the amount exempt from income tax. With hindsight, however, it is clear that people with lower than average wages did indeed have more money in their hands and, according to the OECD, inequality in Estonia has decreased, ”said the president of the junior partner. of the bipartisan government coalition, according to a press release.

“An equally good example is that of excise duties, the timely reduction of which has considerably increased our common income,” he added.

Over the past decade, the way people do business, work and consume has changed dramatically, Ratas said, adding that the sharing economy, electronic services, cross-border commerce, forms of telecommuting and volunteering have become new forms.

“If we look at these changes from a tax perspective, there are still more questions than answers: who and how should we tax and who is consuming these services? said Ratas.

“At the same time, it is clear that Estonia must remain competitive in the world, and do so in the wind of dizzying global changes of course. I mean the direction towards environmental sustainability, innovation and digitization that we have taken in the European Union “, said the former Prime Minister.

Ratas added that by this he also meant the proposed introduction of a minimum corporate tax rate, which was only recently requested by the G7 states.

“In my opinion, it is wise for Estonia not to resist change or to follow the last, but to adapt among the first and to help others to implement the change. It is also possible to win thanks to that, ”Ratas added.

Businessman: Estonia should start levying social tax on passive income

Social tax should be paid in Estonia also on dividends and rental income, businessman Indrek Neivelt said at an economic conference of the Center Party on Tuesday.

“A person pays out of their income, but basically nothing is paid out of dividends and rental income, that’s not fair. We tax the labor but we don’t tax the passive income,” Neivelt said. “A normal society would do the opposite, motivate people to work, not just sit idly by and do nothing.”

Neivelt said all income should be subject to the same social tax. However, the tax could be capped at a certain level, such as the president’s salary.

“All people pay social taxes on all their income. It does not discriminate against those who receive high wages,” he added.

Neivelt also said taxes should be used to motivate people to lead healthier lives. A large portion of healthcare spending is currently spent on treating lifestyle-related illnesses, he said. Therefore, individualized social taxes could be introduced, with people with lifestyle diseases paying a higher social tax.

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DOF: Axie Infinity players must pay “pet” trade income tax

Photo credit: AxieInfinity.com

MANILA, Philippines — Players of the popular online game Axie Infinity who sell “pets” and earn real-world money must pay income taxes owed to these transactions, the finance ministry said ( DOF).

“Whoever makes money out of it is income that you have to declare,” Deputy Finance Secretary Antonette Tionko told reporters last week.

Amid the extended COVID-19 quarantine, CNBC reported in May that thousands of Filipinos had become addicted to up-and-coming games like Axie Infinity, where players earn cryptocurrency and non-fungible tokens (NTFs). by cultivating fantastic creatures called “axies”.

While players cannot yet monetize the NTFs they earn in the game itself, the online pet ax trading generates thousands of pesos when sold.

Whether axies are paid in cash or in kind, Tionko said these transactions are taxable.

Tionko said that even the cryptocurrency earned in Axie Infinity is taxable, although the government has yet to put in place a mechanism to determine the amount and actually collect tax on these digital assets.

“Cryptocurrency is an asset, so it’s already taxable in the Philippines. What type of tax applies? Certainly the earnings are subject to income tax, ”Tionko said.

“But if you look at the details, a lot of it will depend on its characterization, which I think is something for the SEC. [Securities and Exchange Commission] and the BSP [Bangko Sentral ng Pilipinas] decide, ”she said.

“Is it a security? Is it a currency? So it is these elements that will help us set the rules for how it should be taxed. But however it is characterized, it is taxable – subject to income tax, ”Tionko added.

But Tionko said the purchase of tokens to play the game is not taxable.

“Remember the principle of taxation: it is a flow of wealth. Buying is therefore not a flow of wealth. Maybe it’s taxable for them if you buy it at a discount, but that gets into the nitty-gritty, ”she said.

For Sky Mavis, the Vietnamese game developer behind Axie Infinity, its revenue from the game cannot yet be captured by the Philippine tax authorities.

Citing a report from the Bureau of Internal Revenue (BIR), Tionko said Sky Mavis is a non-resident foreign company that is not registered in the Philippines.

“This is one of the things that we hope to grab once we have this registration system for non-residents, these types of businesses that are not in the Philippines,” Tionko said.

Pending in Congress, bills to levy a 12% value added tax (VAT) on digital goods and services, especially transactions through global online platforms.

Documents on the 2022 billion peso national budget proposal for 2022 showed that more than a third of the 3.29 billion pesos in tax and non-tax revenue the government has scheduled to collect next year would come from the ‘income tax.

Of the 3.13 trillion pesos in tax revenue targeted for collection in 2022, taxes on net income and profits would amount to 1.25 trillion pesos, while VAT is expected to contribute 443.98 billion. pesos.

The BIR was tasked with collecting 2.43 trillion pesos in taxes next year, up from this year’s target of 2.08 trillion pesos.

The BOC’s 2022 target, meanwhile, was 671.66 billion pesos, up from its 2021 program of 616.75 billion pesos.

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