Countries that tax bitcoin are actively shooting themselves in the foot and they dont even understand they are doing it

The UAE levies zero income tax and zero capital gains tax on its residents. This means you can spend your bitcoin on whatever you want whenever you want without having to keep any financial records.

However, in a country with capital gains tax every time you spend $3 worth of bitcoin on a cup of coffee you need to record the amount in btc, the dollar equivelant, the date, the time, the purpose of the transaction, the recipients public address, the transaction ID, and then calculate the difference in dollar value between when you bought the bitcoin compared to when you used it to buy something, FOR EVERY SINGLE TRANSACTION! You also need to make sure to keep these records for up to six years incase you are audited. The punishment for not doing this can be jail time.

In the UAE because there is no capital gains tax there are no taxes owed, and because there are no taxes owed there are no records to keep meaning you can spend your bitcoin without having to worry about keeping a single financial record of it.

Along with no capital gains tax the UAE also levies no income tax which means you can earn income from lightning channel fees or staking without having to keep any financial records.

If you earn rewards from lightning fees or staking in a country with income tax you need to record the amount of rewards earned, the dollar equivelant at the time they are earned, the date, the time, the transaction ID, then calculate the taxes owed as if it were income, and this needs to be done every time you earn a reward which could be every minute of every day leading to thousands of transactions needing to be recorded. Then if you sell those rewards or use them to purchase something you need to calculate the difference in value between when you earned them and when you sold them or used them to purchase something and pay capital gains tax on the difference.

The amount of record keeping is absolutely insane.

In the UAE you do not have to do any of that because there are no income taxes or capital gains taxes.

Just looking at this example, if bitcoin does grow and become used by billions of people around the world as an alternative form of money, then a non trivial amount of these people will say "I do not want anything to do with that record keeping burden because it is insanely oppressive". This is not about having to pay taxes, it is about having to keep all of those financial records. Simply put you should not have to keep financial records just because you bought a freaking coffee.

Any person who has the means to leave a system that imposes that much record keeping burden and move to a country that allows them to live without that headace will do so, Inevitably!

This means a non trivial amount of wealthy individuals will leave western countries for places like the UAE just to not have to deal with the record keeping burden.

Countries that do not levie income tax or capital gains tax are going to benefit massively at the expense of the west by doing nothing at all besides allowing their residents to live without ridiculous tax record keeping burdens.

And for this reason that means all of the welath and innovation and business surrounding bitcoin is going to flood into places like the UAE at the expense of the west.

Every country that taxes bitcoin is just shooting themselves in the foot and they have no idea this phenomenon is already happening today. If bitcoin does become used as money around the world this phenomenon is going to cause western countries to lose so much wealth and stagnate while zero tax jurisdictions are going to become the next generation first world countries because all of the bitcoin wealth and innovation is going to be flooding into their countries.