The inclusion of digital assets on taxes represents a significant change in the way tax authorities approach taxation today. A digital asset is a property that is stored electronically and can be bought, sold, owned, transferred or traded. Examples include convertible virtual currencies or cryptocurrencies, for example, bitcoin, stable coins and non-fungible tokens (NFTs), which include digital collectibles.

A digital asset that has an equivalent value in real currency, or acts as a substitute for real currency, is called a convertible virtual currency, for example, a cryptocurrency. It can be used to pay for goods and services, trade digitally, exchanged for or converted to real currencies or other digital assets.

Since the emergence of Bitcoin in 2009, digital currencies have gained popularity; Around 2017, the rise of initial coin offerings (ICOs) and the increase in the value of cryptocurrencies attracted the interest of investors. The increasing integration of digital assets into our economy has prompted authorities to re-evaluate and refine tax regulations for these intangible assets.

The Organization for Economic Cooperation and Development (OECD) has been instrumental in creating policies. In 2019, it issued a study on the taxation of digital assets, laying the groundwork for numerous nations to begin enacting laws on the matter. In 2021, many nations enacted unique statutes requiring digital asset intermediaries to submit transaction details to revenue collectors, in order to improve clarity and decrease the concealment of digital values.

The tax definition of a digital asset is any digital representation of value recorded on a cryptographically secure distributed ledger (blockchain) or similar technology.

If you have digital asset transactions, you must report them regardless of whether they result in a taxable gain or loss. To do this, it is important that you:

• Keep records: these must be accurate and contain all transaction information.
• Calculate your capital gain or loss: that is, if you own and use a digital asset for personal or investment purposes, the income would be taxed as a capital gain or loss when you sell or dispose of it. If you receive a digital asset in exchange for goods or services in a commercial or business context, the income would be taxed as ordinary income or as a loss.
• Determine your basis: the basis of a digital asset is the cost in US dollars.
• Report the income on the correct form: this will depend on the type of transaction you made.

In conclusion, the integration of digital assets into the tax framework by 2025 is imminent. The increased use of non-conventional financial assets demands evolved regulatory and tax measures. Taxpayers must stay informed about legal updates and have the appropriate documentation to comply with tax obligations and avoid penalties.