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Re: [Taler] How does the "Withdraw Loophole" enable untaxed payments?

From: Rune K. Svendsen
Subject: Re: [Taler] How does the "Withdraw Loophole" enable untaxed payments?
Date: Fri, 12 Mar 2021 12:06:48 +0100

Hi Christian,

Thank you for your response and the PDF.

As far as I can see, whether this loophole can actually be used for
tax evasion depends on the definition of a taxable event in whichever
jurisdiction Taler is used. A customer "C" withdrawing talers (via the
Withdraw Loophole) to merchant "M1", who then spends the tokens with
merchant "M2", is only problematic if M1 receiving the talers is a
taxable event. If not, ie. if the only taxable event is *redeeming*
the talers at the exchange for a wire transfer, then there's no issue
since this is equivalent to the C withdrawing Talers to itself and
spending them with M2.

To be clear, I'm considering the use of Taler where a private entity
runs an exchange, and this exchange's Taler tokens thus become IOUs
that are redeemable (by merchants) in whichever currency the customer
sent to the exchange to begin with.


On Fri, Mar 12, 2021 at 10:18 AM Christian Grothoff <grothoff@gnunet.org> wrote:
> On 3/12/21 8:15 AM, Rune K. Svendsen wrote:
> > Dear list,
> >
> > I was reading Florian Dold's thesis on GNU Taler, and I had trouble
> > understanding the allegedly problematic aspect of the "Withdraw
> > Loophole". My reasoning about this being unproblematic is as follows:
> > since the merchant, who receives payment via the Withdraw Loophole,
> > will eventually need to deposit the funds with an exchange (in order
> > to be paid by the exchange), and thus reveal the amount it has
> > received, it does not enable untaxed payments. The exchange will
> > always know exactly the amount received by a merchant, regardless of
> > whether it was received via the Withdraw Loophole or not.
> >
> > Can someone elaborate on why the above reasoning doesn't hold?
> The merchant receiving coins via the withdraw loophole can spend them at
> another merchant.
> Anyway, Dold's thesis contains a rather concise explanation on how to
> *fix* the withdraw loophole, I've attached an unpublished draft that
> elaborates a bit more on the fix and the drawbacks it entails, in case
> you are curious.
> -Christian

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