Monday, June 5

Colombian tax authority fines two people for trading cryptocurrencies through LocalBitcoins – DiarioBitcoin

For Angel Di Matteo @shadowargel

The Directorate of National Taxes and Customs of Colombia (DIAN) pointed out that the people in question incurred irregularities when declaring their taxes in 2019, since they did not mention transactions with cryptocurrencies made through LocalBitcoins, which opens an important precedent for what could come in the future for platform users P2P.


The Directorate of National Taxes and Customs of Colombia, better known by its acronym as the DIAN, sent notifications to two residents of the country to report irregularities in their declarations of the Income Tax (ISLR), pointing out that these people were omitting information in relation to commercial operations with cryptocurrencies allegedly carried out through LocalBitcoins, one of the main international references for the purchase and sale of Bitcoin vía P2P (Peer-to-Peer).

Non-compliance in declaration of operations with cryptocurrencies

This is revealed by a couple of notifications dated December 23, to which the team of DailyBitcoin had access, in which the indicated persons had to assume the payment of fines for commercial operations with cryptocurrencies carried out in 2019, which apparently were not duly reported in the declaration of the Income tax for the corresponding year.

The respective notifications correspond to the cases of two residents in the city of Bucaramanga and the notifications in question had the title “Possible inaccuracies in the income and complementary tax declaration, taxable year 2019 for operations carried out with cryptocurrencies”.

Using a similar format, in both documents they are informed about certain existing inconsistencies regarding the report made for that year, detailing the number of commercial operations carried out and an approximate calculation of the associated capital movements in their equivalent to Colombian pesos.

Inconsistencies, corrections and fines

Both documents read the following:

“The DIAN, as an essential public service provider called Fiscal Service, whose objective is to contribute to the fiscal security of the Colombian State and the protection of the national economic public order, is allowed to inform you that it has been selected for a control action, in accordance with the information sent by the Subdirectorate of Tax Control and by the Finnish Tax Authority, in which possible inaccuracies were determined in the gross income made in its income statement and complementary taxable year 2019…”.

The record in question includes the following data in one of the notifications:

Information reported by the DIAN on commercial operations with Bitcoin
Information reported by the DIAN about business transactions with Bitcoin

The reports in question invite those mentioned to verify the inconsistencies and make the applicable corrections as the case may be in the corresponding statements, all within the framework of the provisions of article 644 of the ET, contemplating in turn the payment of the respective fines and sending all the information associated with the negotiations with Bitcoin.

Local Bitcoins involved?

As indicated before, the reports issued by the DIAN refer to a collaboration with the Finnish Tax Authority, country in which it has its headquarters of main operations LocalBitcoins, the platform P2P with more experience for the purchase / sale of Bitcoin on an international level.

Unlike conventional exchanges, a service P2P What LocalBitcoins connects buyers and sellers to finalize the purchase / sale of a cryptocurrency, which remains in custody within the platform while the parties schedule the corresponding payment externally under the modality that has been agreed (in cash, bank transfer, payment app). phones, other digital currencies, etc). This operation frees the company from being responsible for all contact with fiat money, so it would not need to request licenses associated with capital management, thus being able to offer its services without so many bureaucratic procedures.

Originally, these platforms usually only operate with an email, a password and an associated telephone number, implementing some other requirement depending on the provisions indicated by the responsible company. However, specifically in the case of LocalBitcoins, the platform introduced measures key (Know Your Customer) and AML (policies against money laundering) with which it began to request personal information from users, precisely to comply with the applicable international guidelines and thus close the path to bad practices associated with the use of cryptocurrencies.

Therefore, under compliance with these and other regulations, LocalBitcoins accepts the opinions of the Finnish Financial Supervisory Authority, entity under which it is registered and appears as the main entity in charge of supervising its activities.

Collaborate with the authorities

In consideration of the foregoing, in accordance with the terms of use and service managed by LocalBitcoins, as established in your privacy policy in numerals 2.7 / 2.8 / 2.9 referring to the handling of personal data, the platform is fully empowered to process data associated with commercial information, transactions with Bitcoin and all user communications – including all metadata associated with the aforementioned aspects – in case any authority requests this information, and/or if this is necessary for the legitimate interests of the company.

In numeral 2.8 it reads:

“The legal bases for this processing are: the execution of a contract between you and us and the fulfillment of a legal obligation to which LocalBitcoins is subject, namely, to comply with laws against money laundering and the financing of terrorism and our legitimate interests and/or third parties, namely, to prevent, detect and investigate fraud, criminal activity or other misuse of the services”.

Implications of what happened

Although the process in question is legitimate and proceeds according to the legal frameworks in force for both the DIAN as for the Finnish Tax Authority, Then certain questions arise about the repercussions that this type of event could have for those who trade through LocalBitcoins or other platforms P2P from Colombia, a country that still does not have precise legal frameworks for dealing with cryptocurrencies from a utilitarian and/or commercial perspective.

To get some perspectives, DailyBitcoin interviewed Camilo Suárez, founding CEO of the firm Suarez Venegas Lawyers and president of AsoBlockchain, who shared some details about the communications sent by the DIAN to merchants Bitcoin and the implications of these events for the future.

Camilo Suarez, president of Asoblockchain.  Image courtesy of Camilo Suarez
Camilo Suarez, president of AsoBlockchain. Image courtesy of Camilo Suarez

There are no clear laws yet

In the first place, Suárez indicated that everything seems to indicate that the information contemplated by the DIAN could have been facilitated by LocalBitcoins, this in response to a request to the competent Finnish authorities by the Colombian tax agency. However, from a legal perspective there are a couple of things to attend to:

  • The first is that the affected people are being singled out for irregularities and inconsistencies reported in 2019, this at a time when Colombia still does not have known legal frameworks that apply to this type of operation. In this sense, he stressed that the law cannot be retroactive, so people cannot be punished for something that happened before an associated law was established.
  • On the other hand, since the provisions for trading and taxing cryptocurrencies are not entirely clear, it is not very clear what was the guarantee to request this information from the trading platform in question.

Possible “Domino effect

Another aspect that Suárez warns about is that this could set an important precedent and we could begin to see more frequently this type of circulars between crypto users who make use of platforms such as LocalBitcoins.

However, the most important wake-up call is that possibly other platforms P2P join this trend, so Suárez does not rule out that in the not too distant future Binance, Paxful or any other service must provide commercial information about users operating from Colombia.

The lawyer also made it clear that all these announcements come at a time when major exchanges are working hand in hand with local banks to bring their operations to the country. Let us bear in mind that a pilot program promoted by the Financial Supervision through its Sandbox regulatory.

The rules of the game need to be clarified.

And to finish, Suárez pointed out that the position from AsoBlockchain aims to establish work spaces with the DIAN and with the other corresponding regulatory entities, this precisely to advance in the design of agreements and strategies that guarantee adequate compliance with the regulations but also create fair conditions for crypto enthusiasts and entrepreneurs who market these assets.

Suárez once again highlighted the importance of complying with the tax obligations associated with this type of activity, but for this, greater clarity must be achieved on the subject, because there are still no precise rules applicable to this type of case, which leaves room for free interpretation of both the members of the crypto ecosystem and legal and government entities.

Recommended reading

Article by Angel Di Matteo / DailyBitcoin

main image of Unsplash

WARNING: This is an informative article. DiarioBitcoin is a means of communication, it does not promote, endorse or recommend any investment in particular. It is worth noting that investments in crypto assets are not regulated in some countries. May not be suitable for retail investors as the full amount invested could be lost. Check the laws of your country before investing.