Chinese lawmakers have delivered long-awaited clarification on foreign tax policy, leading to speculation that further concrete financial statements and possible clarification of its stance on Bitcoin could be imminent.
While China is renowned for not being explicit when it comes to fiscal policy, unexpected comments this week have given industry experts cause to consider whether the mood in Beijing is slowly beginning to favor transparency.
“Now, [clarity] is finally coming,” a participant in a training scheme for China’s Qualified Foreign Institutional Investor (QFII) program told the South China Morning Post.
Hints of changes have hitherto only been released as part of this training session, which governs taxation of foreign investors from 2009 onwards. Previously, “foreign investors [had] long been frustrated by Beijing’s reluctance to specify how past trading profits would be taxed, while reserving the right to tax them later,” the Post reports, but attendees were provided with literature suggesting a firmer decision had been made.
If so, other grey areas could also be addressed, such as digital currency, expectations about which are fuelled by continuing Chinese Bitcoin trading and hardware production activity.
Indeed, major Chinese exchange BTCChina yesterday quoted cryptocurrency lawyer Roland Sun, the latter having declared during an appearance on Let’s Talk Bitcoins that “Bitcoin and digital currencies have been officially recognized as lawful virtual commodities” by Chinese authorities.
"#Bitcoin and like #crypto currencies have been officially recognized as lawful virtual commodities" in #China t.co/eUUcrGBYhU
— BTCChina (@btcchina) March 5, 2015In reality, however, no new mention of digital currency has been made, Sun’s comments being based on an interpretation of current policy.
Weiwu Zhang, a prominent Bitcoin commentator whose analyses of Chinese economic policy have become renowned throughout the community, conversely told Cointelegraph that there was hitherto no cause for optimism:
“I do not expect tax office ruling over QFII or RQFII revealed clues on possibility of bitcoin ruling. They are individual events. In the long run I am still non-optimistic on China's bitcoin regulation.”
Zhang further estimates that increased transparency on the part of tax authorities is not likely to snowball into other areas and that foreign speculators are likely to misconstrue current activity.
“I expect the western audience, intuitively connecting anti-graft with transparency, looked for clues of progress towards transparency in the decisions and rulings, and further in ruling of bitcoins. However in China anti-graft is connected to less, not more, transparency and clearness,” he explained.
In essence, it would seem, there can be no suggestion that a full policy change on certain economic issues is due on the part of the Chinese establishment.
“The tax office is a very bad tool to be used against Bitcoin,” Zhang added. “…The previous ruling of PBOC, on Bitcoin being a legitimate trade between individuals, has a few reasons that make people believe it [is] not a green light… If tax office issues any ruling, it will be taken as a green light.”
It’s an angle echoed by fellow exchange Huobi, which in a statement to Cointelegraph confirmed that “the Chinese government has never issued any tax guidance on bitcoin and we have seen nothing to indicate that changes are coming.”
“A new tax policy toward foreign investment profits is not cause to speculate on the future tax treatment of bitcoin; they are very different asset classes and the bitcoin market is still an extremely small niche,” the company added.
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