Japan’s government seeking ways to prevent crypto tax evasion
Japanese government reportedly is trying to set up a system in order to prevent tax evasion on large profits made from crypto transactions. The information was shared with daily Japanese newspaper Mainichi Shimbun by sources familiar with the matter.
According to the sources, the new system will be allowing the National Tax Agency (NTA) to get all information from transaction intermediaries like cryptocurrency exchanges. NTA can ask for information on customers who are suspected of tax evasion and the information include their details like names, addresses, and 12-digit individual identification numbers.
The sources have also mentioned that the new system will be elaborated by the government in 2019. It reportedly aims to introduce it by the new fiscal year, that is, in April 2020. Due to privacy concerns, the government intends to only allow NTA to request data only from those users who have supposedly earned at least 10 million yen ($88,700) from cryptocurrency transactions. Under the current system, NTA can only get information if crypto exchanges and other businesses in the crypto space provide the data on customers voluntarily. They can even refuse to do so.
According to a Mainichi Shimbun report, “Profits gained from virtual currency transactions are classified as miscellaneous income under the Income Tax Act. Salaried workers who gain at least 200,000 yen a year in such earnings are required to declare them as income.” It is to be noted that in a recent NTA survey it has been found that over 300 individuals declared that they have earned at least 100 million yen in 2017 from crypto transactions.
Japan is not the first one to try this kind system. In fact, the United States and many other countries have already introduced similar type of systems. This was a necessary step as officials suspect that evasion cases are rising with the growth of crypto.
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