With the rising popularity of cryptocurrencies, the question of tax treatment of crypto currency mining has become increasingly relevant.
In a case of proof of work, a person can mine crypto currency for his own account, or for someone's account by providing access to excess computational power or data farms.
For purposes of this public clarification, "crypto currencies" are a form of virtual assets. Examples of crypto currencies include Bitcoin, Ethereum (Classic), and other currencies that are based on proof of work.
This Public Clarification clarifies the VAT treatment of crypto currency mining using the proof-of-work mechanism.
Crypto currency mining by a person for his own account is not a taxable supply and falls outside the scope of VAT.
Mining crypto currency on behalf of another person, i.e. supplying computational power, is considered to be a taxable supply of services.
Input tax incurred on expenses by a person mining for his own account would not be recoverable as the person would not be incurring these expenses to make a taxable supply.
However, input tax incurred by a registran...