Just 0.53% of investors paid crypto tax in 2022, study finds

What makes this new research report stand out is that it took a rather unconventional approach to estimate the tax payment rate. Specifically, it relied on a mix of official government figures, global crypto ownership statistics, and search volume data as opposed to surveying a limited number of respondents. 

In India, the government has introduced a 30% tax as well as 1% TDS on cryptocurrency in 2022, but the report concluded that only a very small amount of investors (0.07%) declared and paid tax on crypto in 2022 in the Asian country. At the extreme ends of the spectrum, the compliance rate was the lowest in the Philippines at 0.03% and the highest in Finland at 4.09%. 

Australia earned second place with 3.65% of investors declaring and paying crypto taxes, while in the US, which hosts the world’s largest number of cryptocurrency users, the crypto tax payment rate was at just 1.62%, slightly below Canada, where 1.65% of investors paid their crypto tax. 

In Austria, 2.75% of crypto investors declared and paid cryptocurrency taxes, with similar numbers of 2.61% being present in the UK. 

The methodology behind the Divly report was named questionable by publications such as cointelegraph, as the report itself noted that search volume data may not accurately reflect the actual number of crypto taxpayers, as not everyone who pays tax searches for crypto tax-related information online.

What is causing this low rate of crypto tax payments?

According to Divly’s report, the public awareness of cryptocurrency reporting requirements is different in each country, and some users are simply unaware of their tax obligations. The higher rates of compliance observed in countries such as Japan and Germany resulted from increased government enforcement, which resulted in higher availability of tax calculators and other tax services. 

As for the US, the country could also experience a boost in crypto tax payments in 2023 according to Indiatimes.com. The Divly study highlighted US President Joe Biden’s plans to introduce changes to crypto taxation in a new budget blueprint for 2024.  

These alterations could potentially target wash trading and introduce a new tax on electricity for Bitcoin mining. As a result, as the government keeps a closer eye on the crypto industry, more investors could feel obliged to declare their crypto holdings in the future.