Study claims 99.5% of crypto investors paid no taxes in 2022

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Swedish crypto tax firm Divly has released a new report that estimates that only 0.53% of crypto investors globally paid tax on their crypto in 2022, however, tax experts have cast doubt on the numbers and the methodology.

Published on April 5, the Divlyreport arrived at the estimate after analyzing the relationship between the number of people who declared cryptocurrency on their tax returns and the search volume of crypto-tax related keywords in various countries. It also used the number of crypto holders in each country according to StatistasGlobal Cryptocurrency Report in its calculations.

The report estimates that Finland has the highest proportion of crypto investors who paid the required crypto taxes in 2022 at 4.09%, with Australia following close at 3.65%.

The United States ranked 10th on the list, with about 1.62% of crypto holders paying taxes, while India, Indonesia, and the Philippines had the lowest rates of investors in crypto paying taxes, at just 0.07%, 0.04%, and 0.03%, respectively. .

Source: Divly

The methodology used to arrive at the estimates is questionable. The report itself qualifies the findings by noting that search volume data may not accurately reflect the true number of crypto taxpayers, as not everyone who pays taxes searches online for crypto-related information. tax.

Another assumption of the methodology was that the number of searches related to crypto tax reporting did not vary from country to country. Additionally, he warned that there could be a potential bias towards countries with greater internet accessibility and more accurate search volume data.

Danny Talwar, global head of tax at crypto tax software Koinly, took issue with the large chunk of crypto investors not paying taxes, as the report suggests. He told Cointelegraph:

The likely 99.5% does not reflect countries that have crypto-specific tax guidelines and strict compliance requirements such as the United States, Canada, Australia, and India.

Chartered accountant Greg Valles, board member of Blockchain Australia, also said he would not be able to say conclusively that the methodology is 100% accurate.

The two tax experts noted that data-matching and government surveillance efforts meant that it was becoming increasingly difficult to avoid crypto taxes.

Valles said that as government technology becomes more sophisticated and specialized, it will become easier to detect anyone who does not comply and warned that those who do not report their crypto profits now risk catching up with them years from now. coming.

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Talwar pointed out that although the risk of non-compliance for crypto is comparatively higher than for other asset classes, tax authorities in many countries have processes in place to obtain data from crypto exchanges. .

He added that Koinly has seen crypto tax awareness increase significantly among investors in these jurisdictions, with only 15% of surveyed crypto investors unaware of their crypto tax reporting duties.

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