作者：冷风Meta

With the development of Web3 and cryptocurrencies, an increasing number of investors and practitioners are facing an important question: Is Web3 revenue taxable? This is a complex legal issue involving factors such as tax regulations in different regions, the nature of the income, and the sharing of international tax information. This article provides a brief overview of the relevant tax obligations, combining the main provisions of Chinese tax law with the specific business circumstances of Web3.

I. Web3 Revenue and Chinese Tax Regulations

In China, it is an indisputable conclusion that individuals are required to proactively pay taxes on their overseas income. On the one hand, China has established a relatively comprehensive legal system for taxing overseas income; on the other hand, the deepening development of international tax information sharing mechanisms has made it impossible for residents' overseas income to go unreported. Since 1998, China has gradually clarified the rules for taxing residents' overseas income, forming a complete overseas income tax system based on the "Interim Measures for the Administration of Individual Income Tax Collection on Overseas Income." In 2020, the State Taxation Administration issued Announcement No. 3, further refining the scope and administration of overseas income. By 2025, the State Taxation Administration, through the issuance of the "Measures for the Administration of the Settlement and Payment of Comprehensive Income Tax on Individuals," reiterated that overseas income must be truthfully declared in accordance with the law and strengthened the monitoring of overseas income, especially the tracking of cryptocurrency and Web3-related income. With the application of tax big data and intelligent technologies, tax authorities can more accurately identify which overseas income has not been declared.

From the perspective of international tax information sharing, the OECD launched the Automatic Exchange of Financial Account Information (AEOI) and CRS standards in 2014. AEOI addresses how tax authorities exchange information, while CRS addresses how financial institutions collect and report this information. China committed to joining in 2014 and officially began exchanging information on non-resident financial accounts with other countries in 2018. Under CRS requirements, Chinese tax authorities can now obtain various key information about Chinese residents holding accounts in overseas financial institutions, including names, addresses, taxpayer identification numbers, account balances, interest, dividends, and income from asset transfers, covering a very broad range of entities—banks, securities firms, insurance companies, and trusts are all included. Currently, China has established routine automatic exchange with more than 100 countries and regions, including major financial centers such as the UK, Singapore, and Switzerland. This provides a crucial data foundation for tax supervision, enabling more accurate identification of undeclared overseas income.

II. Taxpayer Identification and Tax Treatment of Different Web3 Revenues

(a) Identification of taxpayer status

The key factor in determining whether overseas income needs to be declared under Chinese tax law is whether the individual is a tax resident. According to the "Regulations for the Implementation of the Individual Income Tax Law," if an individual is a Chinese tax resident, all their income, including wages, labor income, and investment income earned overseas, must be declared and taxed in accordance with the law. This means that regardless of whether Web3 income comes from wages earned from overseas projects or interest or liquidity mining rewards obtained through DeFi platforms, it may involve tax issues.

The criteria for "Chinese tax residents" need to be considered for both "domicile" and "days of residence":

1. Having a residence within the territoryThis refers to individuals who have habitually resided in China due to household registration, family ties, or economic interests. Even if they work or live abroad for a long time, they may still be recognized as residents as long as they do not give up their household registration or family ties.

2. Residing in the country for 183 daysAn individual who resides in a tax year for a cumulative period of 183 days or more, even if he or she has no domicile, is considered a resident.

For the vast majority of Chinese citizens who live and work in China long-term, they are, in principle, resident individuals and are required to pay taxes in China on their worldwide income (including overseas income).

(ii) Handling of different Web3 revenue streams

Web3 income takes many forms, but since Chinese tax law does not have a separate tax category for crypto assets, it needs to be classified according to the "nature of income" within the existing tax system. Web3 income can be divided into several main types, each with different tax treatment:

1. Salary incomeIf someone works in a Web3 project overseas, in a development or management role, and receives USDT or tokens as salary through an on-chain address, this type of income is typically considered "salary and wage income" in China and needs to be declared as personal income tax. If the project team has already withheld part of the tax, there may also be issues related to tax credits.

2. DeFi yieldsInterest income and liquidity mining rewards from DeFi protocols may be considered "business income" or "other income." If participants frequently adjust their strategies or engage in arbitrage, this may be considered more business-related income, and the tax treatment will differ accordingly.

3. Airdropped tokensAirdropped tokens issued by DAO projects to contributors are generally considered "incidental income" or "other income." These tokens have significant market liquidity and value fluctuations, and tax authorities typically calculate taxable income based on the market value of the tokens at the time of receipt.

III. How to handle: Tax preparation for Web3 revenue

For Web3 practitioners, proactively addressing tax issues and planning ahead are crucial to avoiding future risks. First, ensure the completeness of income reporting, especially in cryptocurrency and Web3 projects where the nature and value of income are highly volatile, requiring timely recording of each transaction. Second, understand how to calculate and report different types of income, particularly how to handle the accounting of token lock-up periods, exchange rates, and losses. Finally, maintain communication with tax experts to ensure professional answers to tax questions and avoid unnecessary tax risks due to incomplete information or misunderstandings of tax policies.

Conclusion

With the changing global tax regulatory environment, the tax responsibilities of Web3 practitioners and investors are becoming increasingly clear. While the tax treatment of crypto assets and Web3 income may differ across countries and regions, the trend towards greater global tax transparency makes tracking this income much easier. Therefore, Web3 practitioners should proactively prepare, stay informed about and respond to tax changes, and actively seek professional tax services to ensure compliance and avoid future tax risks.