To establish a seamless tax reporting mechanism for cryptocurrency gains in Japan, the Japanese Tax Commission held a debate on October 17, 2018, per a report by the local media outlet Sankei News.
Standardization of Tax Filing Process
According to the report published, the Japanese Tax Commission is contemplating ways by which gains or profits on cryptocurrency trading can be correctly reported to the tax authorities. The general assembly meeting held by the Commission is not surprising as crypto investment and interest continues to rise in the island nation.
Currently, calculation of profits or gains made through cryptocurrencies can prove to be an exhausting task – courtesy of factors like non-existent regulation policies, and the difference in the price of digital currencies among various exchanges worldwide.
Even the way of storing and archiving historical transaction data is not standardized among different crypto exchanges, which only adds to the cobweb of problems. Concerning the meeting held by the Commission, Minoru Nakazato, president of the Japanese Tax Commission, said:
“Since it is necessary to take into consideration frameworks other than the taxation system and business practices, we will hold a small meeting of experts to deepen the discussion while listening to outside opinions.”
As things stand, any gain from the sale of cryptocurrencies falls under the umbrella of “miscellaneous income” in Japan. This proves to be an excessive burden for the taxpayers as tax rates ranging from 15 to 55 percent are levied on the basis of the actual amount of profits made above a specified threshold value of 200,000 yen per year (approximately $1,800)
Crypto Action on a Surge in Japan
Japan has proved to be one of the hotbeds for cryptocurrencies. Unlike their Asian counterparts China and India, the Japanese have shown a more lenient attitude towards digital currencies along with the willingness to make changes to the existing regulatory infrastructure to imbibe digital currencies in the economy.
As reported by BTCManager on August 10, 2018, Japan’s apex financial regulatory body, the FSA is considering updating the existing regulations concerning bitcoin (BTC) and other cryptocurrencies seeing the rampant speculative trading behavior observed in the investors.
On a more recent note, the FSA also decided to expand its team focused on cryptocurrencies and related activities – observing the growing interest of Japanese companies in establishing a digital currency exchange.
The number of applications seeking approval to establish a cryptocurrency exchange is estimated to reach an unprecedented high in the year 2019.