CoinJar relocates offshore to avoid GST burden
- 01 December, 2014 17:00
Melbourne-based Bitcoin exchange CoinJar is moving its headquarters to London in the UK where it says it can do business in a less burdensome regulatory environment.
In August, the Australian Taxation Office released a draft ruling that meant businesses will be charged the 10 per cent Goods and Services Tax (GST) when a customer buys a product or service using bitcoins, and then charged another 10 per cent when they change the bitcoins into Australian dollars at a Bitcoin exchange.
Bitcoin advocates have said the ATO's treatment of the currency will encourage businesses to move offshore and take jobs with them. In response to the ATO's ruling, Craig Wright, president of the Centre for Strategic Cyberspace and Security Science, said the “double dipping” of tax would put the Australian Bitcoin industry at a disadvantage.
The chairperson of Australian Digital Currency Commerce Association, Ronald Tucker, told the ongoing Senate inquiry into digital currency that the ATO ruling has already resulted in some Australian Bitcoin-based businesses shutting down.
In the UK, however, Bitcoin and other crypto-currencies are exempt from the equivalent of GST — the Value Added Tax (VAT).
Although the ATO’s ruling was not the only reason CoinJar decided to move offshore, it contributed to the decision, said CEO Asher Tan.
The CEO said he was pleased that the tax treatment of Bitcoin and other crypto-currencies had drawn interest from parliamentarians.
“We have put in a submission [to the Senate inquiry on digital currency] last week and we are actually quite optimistic about the discourse between government, entrepreneurs and technologists and how we should treat new technology,” he said.
With its new headquarters based in the UK’s financial technology hub – Level 39 at Canary Wharf, London – CoinJar hopes to reach a larger market, said Tan.
“It is challenging to build software that caters to large markets because in the back we also have to have a lot of things that connect to existing financial services,” he added.
Over the next six months, CoinJar plans to hire 13 staff for its UK headquarters, Tan said.
Tan said one of the main advantages of using Bitcoin compared to carrying out transactions through banks, besides lower transaction fees, is the ability to transfer money from one side of the world to the other in minutes as opposed to days.
“It’s not something you can do within the confines of a traditional financial system. Even in Australia, when you do a bank transfer, it will take three days.”
The Bitcoin exchange also launched a new Web app today that simplifies the process of sending, receiving and storing bitcoins.
Tan said the “human” or interface side of Bitcoin is important in reaching mass adoption.
“We spend a lot of time with our design team and general managers with subject matter expertise in Bitcoin. We look at how we can use technology and make it applicable to [everyday] people.
“I think that’s the key: Not just looking at this great technology, but figuring out how we can use it every day to make people’s lives better.”