TechFlow News — An article published by China Taxation News, affiliated with the State Taxation Administration, titled "Preventing Tax Risks Posed by Virtual Currencies," states that, given the current situation, trading of virtual currencies such as Bitcoin is unlikely to disappear globally in the short term, and their future development direction remains uncertain. Meanwhile, within the current legal framework, China does not prohibit individuals from holding virtual currencies like Bitcoin. Although virtual currency trading is defined as an "invalid civil act," it has not been explicitly prohibited by law. From a tax perspective, China should strengthen interdepartmental coordination and international multilateral regulatory cooperation regarding domestic and cross-border virtual currency transactions involving Chinese enterprises and residents. Priority should be given to preventing illegal cross-border capital outflows and tax evasion using virtual currencies, and virtual currency accounts should be included in the scope of financial account tax information exchanges. Additionally, China should improve related property declaration and registration mechanisms, implementing real-name registration and dynamic tracking for users holding large amounts of virtual currencies. In judicial areas such as confiscation of fines, corporate restructuring, mergers, and bankruptcy liquidation, clear guidelines on the handling of virtual currencies must be established to prevent loss of tax revenue. Furthermore, tax authorities should proactively collaborate with the central bank, financial regulators, market supervision agencies, public security, and judicial departments to severely crack down on illegal activities involving virtual currencies, including underground economies, smuggling, money laundering, and tax evasion.
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