governments love monitoring, this is why they are not too convenient with web3 and decentralization in entirety. To some point it makes sense and to another extent, a continuity of exploitations.
How do you do when you have to pay huge taxes monthly or annually? Ok, get me straight, I am not against tax paying especially when it is used for the right purposes. I have seen some countries use this to improve their entire economy in the aspect of good roads, flexible education system, electricity, security and so on. And yes, to some point, it is just the government wanting more.
As I said, it is not things that are bad but rather, it is humans that tend to spoil things. greed often sets in and this money just keeps pouring for some few hands to fatten their pockets. Currently in our nation, we are well acquainted with VATs.
I came to realize that just receiving a transaction above N9,999 for more than 300 times means I just paid N15,000 to the government. Silently and quietly done and if you don't follow up these tracks, you won't even understand why you are seeing some deficits.
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More of such is coming, it will be taxations upon taxations and yes as an entrepreneur, you will need to restrategize. Trust me, you wouldn't want an entire year to be ‘busyness’ rather than business. So how do big firms offset tax? Mostly, it is done by passing the tax down the consumer chain, something we are likely to see more of from Next year.
There are several other means to do that, millionaires and billionaires are currently taking advantage of tax loss harvesting: w tactics that put every of their spending as loans. Of course the government can't tax loans.
Maybe, just maybe for the time being. Breaking into the heart of this article, let us see how tax will in the process create opportunity for virtual assets especially in the decentralized realms.
This may give rise to more decentralized dominance. It will boil down to who wants to serve some extra bucks for himself. The idea here is simple, stay in investment for a very long time and pay a one time tax. Let's get back to my first VATs analysis. Why I paid that huge was because ALL those transfers came in differently. What would have happened if it were a one time payment? Of course, N50 would have been the entire charge and I would have saved N14950.
The tedious work here is that I am dealing with different individual transactions so it becomes difficult in the process to achieve this. Secondly, telling your client to be sending money above N9,999 twice may seem so inconveniencing. This will be a different case when tackling long term investment.
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Tax is only paid when you accept to make withdrawals. It means for as long as you keep your portfolio untouched, you are not making a taxable profit.
I see the imposement of tax on virtual assets, stocks and whatever leading to a more disciplined investors techniques; maybe for those who understand this numbers.
As I read from an article earlier this month, we are talking of around 15% tax on cryptocurrency profit ( there were some other calculations in between anyway). But the fact remains, the more you withdraw, the more tax you will pay.
To conclude, let me add, the solution as I earlier said is staying long term on investment. This will be about realizing true profit to pull so in case you want to take some profit you can pay a one time government tax fee on that.
In general, we have to look at what this will do to the world of investment. It will bring about a sustainable ecosystem, think of how the there will be enough assets on investment platforms. I am talking of creating enough market liquidity in the process.
It gives decentralized entrepreneurs and its ecosystem time to build out a strong, valuable and profitable ecosystem. One thing always leads to another and from my views, tax will strengthen crypto, web3 and its DeFi ecosystem. Aside from just web3, others indeed will benefit.