Minister of State for Planning Amos Lugoloobi has raised concerns over the challenges posed by crypto-assets during the 2024 Plenary Meeting of the Global Forum on Transparency and Exchange of Information for Tax Purposes held in Paraguay.

In his address, Lugoloobi highlighted the rapid growth of crypto-assets in global trade and commerce but noted that African governments still have very limited data on their use and investment.

"The trade of crypto-assets is decentralised, and the enablers of this trade, such as virtual asset service providers (VASPs), do not need a physical presence in a country to facilitate transactions," Lugoloobi stated. He explained that this decentralisation, coupled with the use of virtual private networks (VPNs), complicates efforts to monitor and regulate online transactions.

"Users of VPNs are able to bypass national payment gateways and avoid detection as they convert their digital assets into cash payments," he said.

Lugoloobi also pointed out gaps in global legislation regarding the oversight of crypto-assets. He noted that only a few jurisdictions have enacted laws requiring VASPs to conduct due diligence and report transactions, leaving significant room for tax evasion.

"Some countries' legislation remains unclear on the taxation regime for digital assets. Therefore, this offers an additional alternative for tax avoidance through aggressive tax planning," the Minister added.

The Minister's remarks come amid growing global debates on the regulation and taxation of crypto-assets, with many governments grappling with how to effectively manage the risks associated with these digital currencies.

The Global Forum meeting provided a platform for discussions on enhancing transparency and information-sharing to tackle tax avoidance and financial crimes worldwide.