Blockchain firms could get millions in tax relief

Blockchain firms could get hundreds of millions in tax relief from governments

Blockchain and crypto technology companies could be given hundreds of millionsof dollars in research and development tax relief.

According to research from tax relief experts Catax, around 82 per cent of work carried out by these firms could be eligible for tax relief.

This, it said, is because blockchain and crypto companies fall under "ingrained innovation". Meanwhile, traditional businesses usually get a 35 per cent reduction for R&D projects.

Catax claims that firms in this area can get such a huge tax reduction because most of their staff are usually developing this technology and applying it to a specific sector as opposed to performing research and development activities in just one area of the company.

However, companies don't specifically have to be categorised in the technology sector. Traditional firms looking to implement these innovations may also be eligible.

Cryptocurrency is extremely lucrative right now, with Bitcoin having already exceeded $12,000 in valuation. Firms also see blockchain as an efficient way to do business.

In this sector, British companies have raised £52.8 million ($71 million) to aid their growth and innovation. While in America, firms have reached over $1.1 billion ($820 million).

American firms are able to apply for tax relief under the R&S Tax Credit system. The UK has yet to introduce such a system to fund innovative companies.

Mark Tighe, CEO of Catax, said blockchain and crypto companies are constantly launching around the world. He believes that funding is important for them.

"Each day we're seeing more and more dedicated blockchain and crypto companies emerge, while a growing number of traditional firms are also allocating significant resource into how they could integrate this technology into their own operations and sector," he said.

"Within the crypto field, innovation is often company-wide rather than channel-specific and so the eligible expenditure is considerably higher than with traditional firms carrying out Research and Development.

He added: "While you can't claim R&D on Bitcoin and the blockchain itself, the potential for relief comes when companies evolve them or create new versions altogether.

" An example might be creating bespoke ‘sidechains' for your sector that run alongside the blockchain, or anew digital currency altogether."