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The Japanese government will establish a system that can track people who refuse to pay taxes on profits from cryptocurrency transactions.
Tax payments on capital gains of cryptocurrency
News from a Japanese newspaper The Mainichi, reports that according to sources, the Japanese government is planning to form a system that would monitor people who make profits from cryptocurrency transactions and capture individuals who refuse to pay taxes on earnings from such transactions.
The new system would authorize the National Tax Agency (NTA) to request transactional details from intermediaries such as cryptocurrency exchanges. These exchanges would provide information on customers that the agency suspects of tax evasion.
According to the Japan Income Tax Act, the gains from cryptocurrency transactions are classified as miscellaneous revenue. With this, people who obtain a minimum profit of 2,000,000 yen per year are included in income tax.
Following current legislation, trade in cryptocurrencies and other virtual currency assets may voluntarily release customer data. The Japanese government would also allow the NTA to request information from such companies, including customer names, customer addresses and a 12-digit individual identification number.
The government is still considering the protection of personal information. The tax authority would only require data on customers who receive a minimum of 10 million only when it can verify that the individual has not reported half of the income. Digital currency firms that are not in favor of such requests may appeal.
A recent NTA poll revealed that over 300 people reported gains of at least 100 million yen from virtual currency transactions in 2017. This profit was due to Bitcoin's record price of $ 20,000 in 2017.
The scheme for the new taxation system would be launched in the 2019 fiscal year.
Landscape regulation of local cryptocurrency
Japan is not re-launching in an attempt to regulate the cryptocurrency sector, improve security and protect investors. The country hosting two of the biggest hacks on virtual currency exchanges has strengthened the regulatory rules for digital currency exchanges in the country.
Reports have recently revealed that the Japanese regulatory agency, the FSA, had plans to regulate the Initial Coin Offerings (ICO). This move by the FSA was to reduce fraudulent ICOs and limit individual investments in ICOs to protect them.
EWN also reported that Japan has made the registration process more severe for the cryptocurrency trade that they wanted to operate in the country. This move was in response to the Coincheck hack which saw the loss of $ 538 million of the value of XEM and to prevent the future disappearance of client funds.
The FSA has also granted self-regulation status to the Japan Virtual Currency Exchange Association (JVCEA), a body that would monitor trade in the country and penalize companies in error.
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