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India 10 years jail for using BitCoins - possible solution for web hosts?
India to submitted a draft to banning bitcoin permanently. It has provision of imprisonment up to 10 Years if some one trade/hold/transact/use any kind of Crypto currencies.
My question is what's the next step for Indian web hosting providers who use Bitcoin as a payment method.
Because with this 10 Years of Jail term it's totally impossible to use Bitcoin anymore.
I know it will take some time to make this draft an actual law..But....
Alternate payment method such as PayPal will not help. Also In India no banks allows payment gateways to allow hosting providers to accept Credit Card payment from International clients. (I have contacted multiple gateways for this issue confirmation)
For example our almost 80% clients pay through bitcoin. So if we stop accepting bitcoins from today then maybe we will loose a huge number of clients after this month end.
Comments
On one side we are preparing to send a man on the moon & Mars, and here the idiots who do not understand how a cryptocurrency works are advocating for its ban.
Drama for this week.
EDIT:
by "here" I mean the panel who has taken the decision.
Setup an offshore company like in Singapore or HK
Payment gateway is also not a big issue, try to contact your bank directly (HDFC or ICICI, atleast i got it approved like 7-8 years ago though not using it anymore) if you have good relationship with them they will approve it, or contact RazorPay I think they even approve it for web hosting companies on case by case basis
Also for one of my Indian subsidiaries i got payment gateway approved by PayUMoney but that was long ago before I moved my business to Singapore
Even 2CO approves Indian Web Hosting companies.
Actually, cryptocurrencies were banned last July and you shouldn't be accepting it if you are using an Indian bank account to withdraw the money (via exchanges?)
What if you legally register your company on another country? For example Estonia provides digital citizenship (or whatever it's called) which allows you to legally register company in the EU. You can use your current company as gateway to provide the infrastructure (e.g. servers, support, etc.) and get paied by the estonian company, while the estonian company collects funds and provide services to end users. That way you will be able to bypass the payment processing limits and bitcoin bans although that may add some more tax and other legal issues.
Edit : HostEONS already mentioned this
@ViridWeb you can try payssion.com they can process crypto currencies for you and I don't think you will be evading any laws since you will not be holding or doing actual crypto transactions as they will be all handled by payssion, you will be asking for payment in USD and also get paid in USD, you won't even have your own bitcoin address. (Still consult your CA or Lawyer)
" Also In India no banks allows payment gateways to allow hosting providers to accept Credit Card payment from International clients."
The Bitcoin bit (no pun intended) is at least a couple of weeks old if not sooner
I thought the issue was with recurring payments via credit card. That is not allowed. This issue I was unfamiliar with..maybe specific to hosting.
Reg Bitcoin I saw a couple of providers here with operations in India. At least one of them who also has International offices, accepts Bitcoin. Wonder how they deal with this. Maybe add a Geo filter?
Can't registered company in Estonia as it's a EU country and we will have to pay VAT for servers. Right now if we buy a server for 100 euro we sale at 120 Euro but if we are registered in Estonia then we have to buy the server for 120 euro including VAT.
So it will increase the price by a huge margin and we have to increase our prices as well and by doing that we will loose huge amount of clients.
May be some other Asian country will have better option but still needs to consult CA/Lawyers for Tax issue.
payssion.com is a good option but still getting paid through USD or EUR wire transfer will result of loosing some good amount of money
Registering company in Singapore is a good option.
Can you please share the procedue or any service provider who can provie the service to register company and help me on TAX filling as well?
Also Is it possible to register company in Singapore for a single person or I need a partner or even a partner who is resident of that country?
It will be great if I can register the company in Singapore with only one Director or share holder which is me.
Also Do I need a physical address or some service can provide a virtual address?
How you registered you company there?
Use google. Will answer most of these questions.
Are you a dumb? Why do you even reply here if you are not suppose to provide any help?
This is not a comedy show where you are doing performance.
We all now how to use google.. We are here just to find a proper solution for our business
Even if I am dumb - I use Google. At least im not lazy :-)
Hmm. The true value of LET as a business advice forum became evident today.
But Why Only 1 TB???
Do you really think dropping to his level will reflect any higher on you?
What purpose did your comment serve...?
India = the country of extremes
You will need following:
1) One Local Resident as Director (There are many CPA in Singapore who provides such services for a fees)
2) Local Address (Also provided by CPA)
3) You will also be a Director and also own 100% Shares
4) You will need to visit Singapore once to open Bank Account
I'll give you another option go for Stripe Atlas Program
https://stripe.com/atlas
You can open a US C-Corp (Inc.) along with bank account and Stripe Payment Gateway without even visiting USA that too just for $500 USD
Once you open company you will need to do ODI (Overseas Direct Investment) Formalities with RBI (you don't need to contact RBI for that, you just need to submit certain documents and forms with your local bank they will forward it to RBI) the paid up capital has to be sent via ODI, if you send it by any other means it will be crime and considered money laundering so make sure to understand how ODI is done and also are you prepared to file APR (Annual performance report) and FLA Returns (Foreign Liability and Asset) every year to RBI (Via your local bank), it will add regular CA fees to your bill.
you will need to do ODI even if you open a Singapore company but Singapore company is expensive compared to US business.
Also once you open a US company you will need to even file regular returns in US (Quarterly as well as Annual along with advance tax as and when applicable) you will need to even pay Delaware Franchise Fees (It's nominal about $250 per year) and also Pay Registered Agent Fees (which is also about $150 per year), you will need to even hire a CPA in US to file returns and look after other legal formalities in US (you can get it for about $100 per month - it should even include books keeping, though it depends how many transactions etc... you have) you will probably need to pay another $500-$1000 per year to your CPA to file your Tax Returns (unless you know how to do it yourself)
There will some more additional expenses
But all of this save you a lot in Forex Charges if you are being paid in USD
So do your research (though i already gave most of the details) before getting into it.
Best of Luck
That's not how VAT works
Not just any run of the mill CA but preferably someone who knows the FEMA in and out as well.
Yup most of the CA have no clue what is ODI
https://m.rbi.org.in/Scripts/FAQView.aspx?Id=32
@HostEONS that post is a keeper :-)
May I add LUT also for service provided to clients are who are outside the country and no legal entity in India?
Added later: basically it is a matter of weighing cost of added reporting and burden of compliance versus any potential business revenue lost
@HostEONS suggestions are very good and valuable.
But, before going Stripe Atlas please consider this: https://news.ycombinator.com/item?id=18870886
If you wanna follow the US path it will be more economical to open an LLC, IMHO. You can form a Wyoming LLC for about $150, just google "Wyoming Registered Agent Service".
As for the bank solution you could try Mercury.
Well, some people are not open minded and put people into jail for bullshit.
Like India did.
Lets not get ahead of ourselves here:
a. Nobody has gone to jail - yet. The law is yet to be drafted as propsed.
b. We let scammers and perps of multi-billion dollar frauds leave the country (dis)gracefully --> Wikipedia links
c. The "expert panel" who made the recco to ban bitcoin is very open minded when it comes to crypto- they want the central bank to launch their own digital currency. Easier to Pwn the process than to enforce the ban. Some of the thinking comes form the Brit legacy who thought that the role of Government was to control and prevent rather than facilitate business and commerce.
d. Historically, every business innovation is first deemed illegal. Technically Uber (and Ola, etc...also till recently, in some jurisdictions : amazon's marketplace) are in the grey area of the legality. Then the Government formulates a band-aid policy, to formalize a way to tax them. Then imposes more control, more revenue streams. An Uber cab + driver for example needs 7 different licenses and permits to operate. (did someone from the Government visit LET and get inspired by the number 7??)
e. (d) stems from the teachings of the Father of the Nation Mahatma Gandhi, who is often attributed to have said " First they ignore you, then they laugh at you, then they fight you, then you win."
So the Government first ignores you, then they say "such an idea will not work here", then they bring regulation, and finally that helps the business become the market leader once they find the right mix of lawyers, tax advisors and consultants. In rare cases, the roles are reversed, and the Government wins.
Cryptocurrency is a tool, no one is going to put someone into jail for buying a hammer.
He won't need LUT for that as LUT is needed only if you are doing exports and don't want to pay GST first and then apply for refund.
In this case his company will be a US or Singapore entity hence GST won't be applicable so LUT is not needed.
Though if he setups another company in India to withdraw money from his US company by showing it as expense like server management services or customer support, I mean since his US company is basically a virtual company and everything managed from India so he may want to show his Indian company as vendor (Customer support etc..) for US company, in that case he will need to get LUT for his Indian company.
One can even withdraw profits in the form of salary but that will attract Advance Tax in US which require more paper work and returns and will also need to apply for SSN Alternative (Forgot what's it's called, it's for non-US residents for IRS purpose, IRS provides it), if he gets it as dividend, then it will attract a much higher tax in India and also corporate tax in US
So basically his US company won't need LUT or any such thing.
Sure, guns are also just a tool but that's why we regulate, control and penalize improper use of said tool, because the potential of abuse and the life changing consequences of improper use of said tool is really high if we don't.
Cryptocurrency finances a large amount of organized crime and terrorism these days, feel free to read through https://www.europol.europa.eu/activities-services/main-reports if you want some proof.
The government is not interested to keep crypto from you but it needs to be regulated to protect its citizen from bad actors. And the amount of abuse and criminal actions being conducted with and/or for Bitcoin in India are through the roof. So banning something until you have better mechanisms in place to deal with it sometimes is the only sane solution.
@ViridWeb with your freedom at risk my personal advice is, if you want to keep using Crypto find a lawyer that is knowledgeable in the field of business and crypto and check out your options that way. Never get advise for something in an online forum that if you f*ck it up could end you in jail or your family hungry.
There are some things you can go cheap on and get advise from the internet. Like what shirt you should buy that fits you nicely. How to operate and run a company that is reliant on cryptocurrency use in a country that is about to ban said use is not one of them.
Well, at least the gun nuts can use their collection to do something.
Crypto? 🤭
All it takes is the PeeArrCee deciding one Monday that enough is enough.
Common guys please don't talk about guns..
This is a serious issue for millions of Indian service providers and it doesn't matter that your are a hosting provider or not.
Yes brother your are right. And we are thinking to shift our company to any other location either Estonia or British Virgin Island.
The only thing right now we are considering is Taxes.
Because doing business in India is almost impossible these days.
I know I am Indian and this is sad to say but this is the harsh truth..