Japan Wants to Simplify Tax Filing System for Cryptos

The Japanese Tax Commission, under the Ministry of Finance, is seeking to streamline the current tax filing system for the cryptocurrency industry to incentivize that crypto investors report their gains accurately.

On October 17, 2018, the commission held a general assembly to go over the possible amendments to the current policy governing cryptocurrency taxation. The commission which advises the prime minister about taxation policies has been reported to be in the development of a new system of crypto investors tax filing process. This new system will simplify and standarize the way taxpayers can calculate the gains generated from digital assets traded against both other cryptocurrencies as well as fiat currency.

Reported by local news outlet, Sankei, the current system of filing crypto gains is encumbersome due to the variable prices over a single virtual coin across multiple exchange platforms. This leaves a huge burden on traders to accurately report the profits that they have earned.

According to the Sankei article (translated), Minoru Nakazato, president of the Tax Committee, stated:

“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.”

At this time, gains from the sale of digital assets in the country are classified as “miscellaneous income” with a sliding tax rate dependent on the actual profit of the investor. The tax rate can vary between 15% to 55%, if the investor surpass 200,000 yen.