The crypto industry has gradually grown into a multi-billion dollar industry, and countries like Japan are beginning to amend their tax-related regulations to include the cryptocurrency industry.
This week, reports surfaced that Japan’s Tax Commission is considering how to simplify the current tax filing system to include cryptocurrency. Sankei News reported that the Japanese taxation policy committee held a general assembly last Oct. 17 to discuss the idea of creating a system that will enable cryptocurrency investors to accurately calculate their profits on the sales of their digital assets against both fiat currencies and other cryptocurrencies.
Calculating cryptocurrency profit is currently a cumbersome task for taxpayers due to the differences in price, depending on the platform. Also, the report noted that taxpayers may find it difficult to submit a proper tax filing as the method of storing historical transaction data is not standardised. The president of the committee, Minoru Nakazato explained the need for a simplified system, saying: “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.”
Currently, crypto investors in Japan have to declare the profits from the sale of their cryptocurrencies, which fall under “miscellaneous income” in filings to the National Tax Agency. A tax return of 15 to 55 percent is required if the gain is above JPY200,000 (about $1,800) yen per year. According to Sankei, “The environment should be adjusted so that tax returns can be simplified.”
Earlier in June, Japan lawmakers had raised the issue of changing cryptocurrency taxation from its current classification to that of “separate declared taxation”; however at that time, the suggestion was pushed back by Japan’s deputy prime minister. The deputy prime minister believed that the general public will find it difficult in understanding the changes. He also claimed that Japanese citizens might not come to terms with a change in tax classification due to the “international nature” of cryptocurrency.
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