The growing pace of cryptocurrency: Japan enforces a new system to avert tax evasion
The increased earnings of crypto-users aid the suspicion of tax evasion amongst regulators.
Reportedly, the Japanese government plans to discourage the influx of tax evasion by implementing a new tax system. According to the National Tax Agency, there has been a huge increase in the yearly earnings of crypto-users since crypto’s recent surge in the market. For instance, in 2017 over 300 people reported earnings of at least 100 million yen.
Under the existing Income Tax Act, the earnings regenerated from crypto-related transitions are reported as miscellaneous income. However, workers who earn 200,000 yen a year or more through cryptocurrency will now have to report their earnings as income and not miscellaneous.
Moreover, the new ordinance will allow the NTA to seek information such as a customer’s name, place of residence, and 12-digit individual identification number. However, the NTA will only inquire information about customers who report earnings of 10 million yen via crypto transactions. The implementation of this new tax system will begin in the next fiscal year of 2019.
Japan is not alone in its intentions to tax crypto revenues. Just this past October, Spain has announced a similar law, requiring all crypto holders to disclose their cryptocurrency assets for the purposes of complying with the anti-money laundering laws, as well as for taxation.