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

[Rune K. Svendsen]

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.


/Rune


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 *fix* the withdraw loophole, I've attached an unpublished draft that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