The question of whether cryptocurrencies need to be reported and taxed has become one of the most discussed topics during the 2025 tax season. According to Chung-Tien-Yen, a partner at KPMG Law Firm, the defining factor hinges on how regulatory authorities classify digital assets. In a recent episode of the Web3 Great Westward Expansion podcast, he emphasized that while Taiwan has not yet enacted a dedicated cryptocurrency law, existing tax principles still apply—and investors must be prepared.
In January 2025, Taiwan’s Ministry of Finance submitted a written report titled “Taxation Guidelines for Cryptocurrency Income” to the Legislative Yuan. This document serves as a comprehensive summary of current tax laws as they may relate to crypto transactions. However, as Chung clarified, it does not introduce any new tax regime specifically for digital assets. Instead, it outlines how existing frameworks could be interpreted in the context of blockchain-based investments.
How Regulators Classify Cryptocurrencies Determines Tax Liability
The core issue, Chung stressed, is how regulators define cryptocurrencies. The Ministry of Finance’s report divides crypto-related income into two broad categories: assets with securities-like characteristics and those without.
Under Taiwan’s Financial Supervisory Commission (FSC) guidelines, certain virtual assets can be classified as securities if they meet specific criteria—such as being transferable and falling under investment contract laws (e.g., the "Howey Test"). Stocks, bonds, and warrants are traditional examples of securities.
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If a cryptocurrency is deemed to have security attributes, then profits from buying and selling it would traditionally fall under capital gains taxation rules. However, under Article 4-1 of Taiwan’s Income Tax Act, gains from securities trading (including stocks) are currently exempt from taxation—a provision that may extend to security-like tokens if they are officially categorized as such.
Yet, as of now, the FSC has not officially classified Bitcoin (BTC) or Ethereum (ETH) as securities. This creates uncertainty for investors who may assume their trades are tax-exempt when regulators could later adopt a different stance.
The Case of Stablecoins: A New Tax Frontier?
Stablecoins present another layer of complexity. Although typically pegged to real-world assets like the U.S. dollar, they can still fluctuate across exchanges due to liquidity differences—creating arbitrage opportunities.
Chung pointed out that this mirrors foreign currency trading. Under current tax rules, profits from forex trading are considered property transaction income and are subject to taxation. By analogy, gains from stablecoin trading could also become taxable in the future—even if the intent was merely to preserve value.
This means investors who treat stablecoins as “safe harbor” assets may still face unexpected tax obligations depending on how authorities interpret their use.
Retain Records: Tax Authorities Can Look Back Up to Seven Years
One of the most critical takeaways from Chung’s analysis is this: tax authorities can audit transactions up to seven years retroactively.
While blockchain technology ensures that all transactions are permanently recorded and immutable, having an on-chain history isn’t enough. Tax agencies require clear documentation of cost basis, transaction dates, exchange rates, and purpose of transfer—details not always evident from public ledger data alone.
Chung advised all investors—regardless of transaction size or frequency—to maintain thorough records:
- Keep logs of purchase prices and fees
- Save wallet-to-exchange transfer histories
- Document any airdrops, staking rewards, or hard fork receipts
- Use spreadsheets or crypto tax tools to calculate realized gains/losses
Without proper documentation, even legitimate traders could struggle to prove compliance during an audit.
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“Infinite innovation brings infinite rights—and responsibilities,” Chung warned. “Just because something is new doesn’t mean it’s outside the law.”
Upcoming Regulatory Shifts: What Investors Should Watch
With the proposed Virtual Asset Management Act expected to be submitted for legislative review by June 2025, Taiwan is moving toward formalizing its regulatory approach. Once passed, this law could clarify definitions around digital assets, licensing requirements for exchanges, and—critically—tax treatment.
Until then, investors should operate under the assumption that any profitable transaction is potentially taxable, regardless of whether formal rules exist.
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Frequently Asked Questions (FAQ)
Q: Do I need to report cryptocurrency gains in Taiwan?
A: While there is no specific crypto tax law yet, profits from digital asset transactions may fall under general property transaction income rules. It's advisable to report gains and keep detailed records in case regulations evolve.
Q: Are Bitcoin and Ethereum treated as securities in Taiwan?
A: As of 2025, the Financial Supervisory Commission has not officially classified BTC or ETH as securities. This affects how they're taxed—if at all—but the status could change with future regulation.
Q: Can I be audited for crypto transactions from years ago?
A: Yes. Tax authorities can review financial activities up to seven years back. Even if you didn’t report crypto gains previously, maintaining accurate records now can help protect you in the future.
Q: Will stablecoin trades be taxed?
A: If stablecoins are used for speculative trading or arbitrage, profits may be considered taxable income similar to foreign exchange gains. Holding them for value preservation may carry less risk, but documentation is still essential.
Q: What happens if I don’t report my crypto gains?
A: While enforcement is still developing, failure to report could lead to penalties if new laws pass retroactively or if audits uncover unreported income. Proactive compliance reduces future liability.
Q: How can I prepare for potential crypto taxation?
A: Maintain detailed records of all transactions, use reliable tracking tools, stay informed about regulatory updates, and consult a tax professional familiar with digital assets.
Final Thoughts: Clarity Is Coming—Prepare Now
As Taiwan moves closer to enacting comprehensive virtual asset legislation, clarity on taxation will follow. Until then, the guiding principle should be simple: assume that every profitable transaction matters.
By understanding how regulators define cryptocurrencies, keeping meticulous records, and staying informed about policy developments, investors can navigate uncertainty with confidence.
The absence of a formal rulebook today doesn’t mean immunity from tax obligations tomorrow. Preparation today ensures peace of mind—and compliance—tomorrow.