DECODING THE GLOBAL TAX FRAMEWORK FOR DIGITAL ASSETS: A COMPARATIVE LEGAL ANALYSIS

AUTHOR – GAURAV ARORA, STUDENT AT CHRIST (DEEMED TO BE) UNIVERSITY, BANGALORE

BEST CITATION – GAURAV ARORA, DECODING THE GLOBAL TAX FRAMEWORK FOR DIGITAL ASSETS: A COMPARATIVE LEGAL ANALYSIS, INDIAN JOURNAL OF LEGAL REVIEW (IJLR), 6 (2) OF 2026, PG. 587-602, APIS – 3920 – 0001 & ISSN – 2583-2344. DOI – https://doi.org/10.65393/LQES6922

Abstract

The growth of digital assets such as cryptocurrencies, non-fungible tokens (NFTs), stablecoins, and decentralized finance (DeFi) has changed the global financial system. These assets operate on blockchain technology and allow users to transfer value without traditional intermediaries such as banks. While this innovation has created new economic opportunities, it has also created challenges for existing tax laws. Traditional tax systems were designed for physical assets and transactions that occur within clear geographical boundaries. However, digital assets are decentralized, borderless, and often pseudonymous, which makes it difficult for governments to classify, track, and tax them effectively.

This paper studies how different countries tax digital assets through a comparative legal analysis of six jurisdictions: the United States, the United Kingdom, the European Union, India, Japan, and Singapore. It examines how each jurisdiction classifies digital assets and how taxes such as income tax, capital gains tax, and indirect taxes are applied to digital asset transactions. The analysis shows that countries follow different approaches. Some countries treat cryptocurrencies as property and apply capital gains tax, while others focus on the economic use of the asset. India has introduced a strict tax regime with a flat tax rate and transaction-level withholding requirements.

The study identifies key issues in the current global system, including inconsistent classification of digital assets, difficulties in valuation and record-keeping, regulatory arbitrage, and enforcement challenges. To address these issues, the paper suggests the need for international cooperation, clearer legal definitions, and technology-neutral tax policies. A coordinated global framework can improve compliance while supporting innovation in the digital economy.

Keywords: 1. Digital Assets 2. Crypto-Currency Taxation 3. Blockchain Regulation     4.Comparative-Tax Law 5. Global Tax Policy