THE TAX SITUATION - AS WE UNDERSTAND IT TO BE - Updated 31 December 2021The following is not advice, it is a view (an opinion piece), on how we think a person's tax situation 'might' be approached. As always we encourage you to do your own research and come to your own conclusions on how best you might deal with your tax situation.
NOBODY LIKES TO PAY TAX, some even say that it is illegal because the people were never asked. We, here at MONEY KIT cannot offer an opinion either way about these things. What follows is how we believe you could deal with your book-keeping entries when it comes to arriving at values and accounting for tax when DEP is used.
OUR OFFICIAL EXCHANGE RATE IS 1:5 - this means that one Dollar | Euro | Pound will buy FIVE DEP. This also means that ONE DEP has been purchased for TWENTY Cents | TWENTY Euro cents | TWENTY pence.
NO EXCHAGE RATES APPLY because DEP does not trade on any financial markets anywhere in the world and also because, regardless of where you are in the world, you will always pay the same amount, regardless of which currency you use. The reason for this is because banks everywhere have signaled that they intend to do away with FIAT currency, so it is pointless for us to set up with exchange rates; we are not going to do it.
BECAUSE WE HAVE A 1:5 EXCHANGE RATE this means that regardless of what you sell something for, or what you exchange DEP for when purchasing goods, the constant (that you can rely on) is what you purchased DEP for.
If you live in Canada or the USA then ONE DEP = twenty Canadian cents or twenty American cents. In New Zealand or Australia ONE DEP is worth twenty Australian cents or twenty New Zealand cents. In Europe ONE DEP is worth twenty Euro Cents and in the United Kingdom ONE DEP is worth twenty pence. When fiat currency disappears completely, none of this will matter because ONE DEP will be worth the equivalent of whatever twenty cents | eurocents | pence will buy.
WHEN ACCOUNTING FOR TAX IN YOUR COUNTRY your selling price in DEP is equivalent to ONE FIFTH of the value for tax purposes.
Example: Susie runs a high-end boutique in London, UK. She has purchased an expensive range of dresses to sell in her shop. She accepts DEP. She knows she needs to clear 48% of her selling price to cover her expenses. In the old days she would put these dresses out for £600 (which means she would be tax-liable for the entre amount) but using DEP she is prepared to take part fiat and part DEP and so the outcome is different.
600.00 x 48% = 288.00 (which she needs to clear to cover those costs she can't pay in DEP)
Her selling price is as follows:
£288.00
D312.00
= £/D 600.00
Tax liability:
Without DEP = £600.00
With DEP £288.00 + (D312.00/5 = £62.4)
Final total for tax accounting purposes = £350.40 instead of £600.00
The bonus is that Susie will be able to legally claim the expenses (in fiat currency) associated with everything related to selling those goods. She can then legitimately take the DEP that she has made on the sale and buy goods and services that benefit herself and her business.
It's money, same but different!
End -
