- Japan has seen a huge surge in tax evasion from crypto related profits (estimated at ~$93 million)
- 50 individuals and 30 companies have been found at fault so far
- Japanese government is formulating new laws that will allow the defaulters to be fined
From America to Japan cryptocurrency regulations all around the globe are still in the medieval stages. Governments aren’t sure on how to regulate crypto but they surely don’t want us to enjoy the massive profits that we often make. Regulatory bodies have always been eager to tax cryptocurrencies because up until now there hasn’t been any solid taxation rule for cryptocurrencies because government bodies are still trying to understand how to handle this budding technology.
- Many nations have placed a shadow ban on cryptocurrencies and those that haven’t been trying to figure out a way to regulate crypto or formulate taxation laws for it. The Japanese tax authority is one such body that is looking to take action because reportedly there has been a lot of under-reporting of cryptocurrency-based profits.
Crypto tax evasion on the rise
The Asian media outlet Asahi Shimbun reported that many Japanese traders and even some businesses have not paid taxes for the profits they have earned dealing with cryptocurrencies. Near about 50 individuals and 30 companies all across Japan have failed to declare their crypto-related income in their tax reports and this in return has stacked a whopping 10 billion yen, which is close to $93 million, due in the government books. This was the result of not paying taxes on their crypto profits for several years. Many relate this figure to be directly associated with the steep rise of the values of various cryptocurrencies especially Bitcoin which show a parabolic rise hitting an all-time high in 2017. Reports have also been made that in cases when the tax-rate exceeded 50 percent a lot of individuals went on the lookout for ways via which they could avoid paying tax on the amount.
Japan setting up a task force
The Tokyo Regional Taxation Bureau that is in charge of handling electronic business transactions has asked several crypto exchanges to submit a complete list of their client’s business transactions for the previous year. This list was then analyzed and a list comprising of all the defaulters who made huge amounts of profits from trading crypto was compiled. Authorities believe that holders of about $7 billion yen of crypto-income have made efforts to hide their income from cryptocurrency transactions.
Finding new ways to find and penalize defaulters
In order to stop the rise of increasing tax evasion the Japanese government is preparing to launch a new system that will authorize National Tax Agency to request revenue information from crypto exchanges under various conditions such as conducting transactions exceeding a certain amount. The information will include names and addresses of individuals found guilty of tax evasion.
- The new law will allow NTA to further receive information about those users whose earnings from crypto amounted to more than 10 million yen ($920,000). The law will also allow the Japanese government to penalize tax defaulters and exchanges that fail to provide the required information. The new system is said to be in effect from January 2020.