Japanese Government to Track Down Cryptocurrency Income Tax Offenders
The Japanese government will establish a system that would track down individuals who refuse to pay tax on profits made from cryptocurrency transactions.
Tax Payments on Cryptocurrency Capital Gains
News coming from a Japanese newspaper, The Mainichi, reports that according to sources, the Japanese government is planning to form a system that would monitor individuals who make profits from cryptocurrency transactions and catch individuals who refuse to pay taxes on gains from such operations.
The new system would empower the National Tax Agency (NTA) to request transactional details from intermediaries such as cryptocurrency exchanges. These exchanges would provide information on customers whom the agency suspects of tax evasion.
Under Japan’s Income Tax Act, gains gotten from cryptocurrency transactions are categorized as miscellaneous income. By this, individuals who gain a minimum profit of 2000,000 yen per annum fall under Income Tax.
Following the present legislation, cryptocurrency exchanges and other virtual currency businesses can release data on clients voluntarily. The Japanese government would also enable the NTA demand information from these businesses, including clients’ names, the address of the customers, and a 12-digit individual identification number.
The government is, however, considering the protection of personal information. The taxation authority would only demand data on customers earning a minimum of 10 million only when it can verify that the individual failed to report half of the income. Digital currency businesses not in favor of these requests can appeal.
A recent NTA survey revealed that over 300 individuals declared earnings of at least 100 million yen from virtual currency transactions in 2017. This profit was due Bitcoin’s record price of $20,000 in 2017.
The outline for the new taxation system would launch in the 2019 fiscal year.
Regulating the Local Cryptocurrency Landscape
Japan is not relenting in its bid to regulate the cryptocurrency industry, improve security, and protect investors. The country which is home to two of the biggest hacks on virtual currency exchanges has tightened regulatory rules for digital currency exchanges in the country.
Reports recently revealed that Japan’s regulatory body, the FSA, had plans to regulate Initial Coin Offerings (ICO). This move by the FSA was to curtail fraudulent ICOs and limit individual’s investment in ICOs to protect them.
EWN also reported that Japan made its registration process stricter for cryptocurrency exchanges who wanted to operate in the country. This move was in response to the Coincheck hack that saw the loss of $538 million worth of XEM and to prevent the future disappearance of customers’ funds.
The FSA also granted self-regulatory status to the Japan Virtual Currency Exchange Association (JVCEA), This body would monitor exchanges in the country and sanction erring businesses.