Japan’s National Tax Agency now requires cryptocurrency investors to declare their profits in annual tax filings due February 16 to March 15. They have ruled capital gains from such virtual currencies as a form of “miscellaneous income” last year in Japan.
The exact words of Kengo Maekawa, CEO of Shiodome Partners Tax states, “There are already people who got wealthy from cryptocurrency trading and who leave the country to head to tax-free places such as Singapore.” He explained that most clients looking for tax advice for their revenue from cryptocurrencies are 30-40-year-olds.
The tax to be levied, on profits from virtual money, runs from 15 to 55 percent, with the top amount applied to investors with annual earnings of JPY40 million (US$365,000).
The decision is based on tax laws 27, 35, and 36. A rough translation of the law is as follows:
“Taxation relationship when profit arises by using No. 1524 Bitcoin [Laws and Regulations as of April 1, 2014] Bitcoins can be used for purchasing goods, etc. However, profits arising from using this Bitcoins are subject to income tax. Gains and losses (gains or losses recognized on the basis of relative relationships with foreign currencies or foreign currency) arising from the use of this Bitcoin, as a general rule, except for cases arising in association with acts that cause various incomes such as business income, It is classified as miscellaneous income. (Law 27, 35, 36).”
Japan isn’t alone in taxing digital money. In the US., the Internal Revenue Service in 2014 declared cryptocurrencies to be property, like gold or real estate, making long-term capital gains on them subject to tax, though at rates lower than Japan.
The revenue-raising potential for the Japanese government could be significant. In recent months about 40 percent of all trading in Bitcoin – the most widely known virtual currency – has been against the yen.
Learn more about Japan’s cryptocurrency regulations here: https://smartereum.com/japan-is-cryptocurrency-investors-to-be-taxed-at-up-to-55-japanese-cryptocurrency-regulations/
So to conclude,
The National Tax Agency of Japan has finally caught up to cryptocurrency traders within its borders, raising fears that these profits could be taxed as high as 50 percent.
Any profit made from cryptocurrencies is now classified as “miscellaneous income,” which includes any gains from sales, trading, purchasing goods with cryptocurrencies, mining, and network forks.