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Taxes
A Japanese lawmaker proposed four changes to Japan's tax law for the benefit of crypto users and merchants, as well as expanding the adoption of cryptocurrency in the country. The current 55 percent tax rate could be lowered to 20 percent while cryptography encryption and small payments could be exempt from taxation.
Read also: The Indian Supreme Court moves the cryptographic hearing, the community asks for positive regulations
Change of cryptographic taxation
Representative Takeshi Fujimaki of the Japanese party Nippon Ishin no Kai in Japan proposed four changes to the current tax system for cryptocurrencies. Fujimaki, who previously served as an adviser to billionaire investor George Soros, announced on Friday:
We believe it is necessary to modify the current system of taxation of virtual currencies in an appropriate tax system in order to develop virtual currency / blockchain technology. The tax system should not deprive the future of virtual currency and blockchain.
The proposed changes are designed to "promote the broader adoption of virtual currency" and "encourage the development of blockchain technology", he clarified.
From 55% of tax rate to 20%
Currently, Japan applies profits from cryptocurrency transactions as varied revenue, which could reach up to 55 percent. Fujimaki explained that unlike wages that are fixed amounts, the gains from encrypted transactions – such as stocks and mutual funds – vary and losses could be sustained for a number of years.
<img class = "size-medium wp-image-259020 alignright” title=”The Japanese legislator proposes 4 tax cuts for cryptocurrency users and traders” src=”https://news.bitcoin.com/wp-content/uploads/2018/12/cut-tax-300×216.jpg” alt=”The Japanese legislator proposes 4 tax cuts for cryptocurrency users and merchants "width =" 300 "height =" 216 "srcset =" https://news.bitcoin.com/wp-content/uploads/2018/12/cut-tax -300×216 .jpg 300w, https://news.bitcoin.com/wp-content/uploads/2018/12/cut-tax-582×420.jpg 582w, https://news.bitcoin.com/wp-content/uploads / 2018 /12/cut-tax.jpg 689w "sizes =" (maximum width: 300px) 100vw, 300px”/>Capital gains from shares and mutual funds are taxed separately from other sources of income, at a flat rate of around 20 percent. "From this point of view, it is necessary [similarly] apply a separate tax with a 20% rate on gains from virtual currency transactions, "he said.
Fujimaki has also proposed to carry on losses resulting from encrypted transactions, which the current law does not allow. Taxpayers with losses from cryptographic transactions this year and subsequent profits, for example, are not able to offset their gains with losses. Has elaborated:
Losses from trading in shares … can be reported and can be deducted from profits in the following year. From the point of view of tax equity, you should also allow for the deduction of losses from virtual currency transactions.
Crypto-to-Crypto encryption and payment exemptions
The trade between cryptocurrencies, such as between XRP and BTC, is currently subject to taxation under the current tax legislation, known as Fujimaki. "The task of calculating profits and losses for each transaction is extremely cumbersome and burdensome," he said, adding:
In order to increase the volume of transactions between virtual currencies and revitalize the virtual currency market, trading between virtual currencies should be tax free.
<img class = "size-medium wp-image-259022 alignright” title=”The Japanese legislator proposes 4 tax cuts for cryptocurrency users and traders” src=”https://news.bitcoin.com/wp-content/uploads/2018/12/btc-shopping-300×277.jpg” alt=”The Japanese legislator proposes 4 tax cuts for cryptocurrency users and merchants "width =" 300 "height =" 277 "srcset =" https://news.bitcoin.com/wp-content/uploads/2018/12/btc-shopping -300×277 .jpg 300w, https://news.bitcoin.com/wp-content/uploads/2018/12/btc-shopping.jpg 358w "sizes =" (maximum width: 300px) 100vw, 300px”/>Another tax exemption proposed by the legislator concerns small cryptocurrency payments, which are expected to increase as more shops begin to accept encrypted payments and more people start using them to pay for goods and services.
For example, a person who eats in a restaurant and pay with bitcoins will have to calculate "profits and losses from the bitcoin price and the purchase price of bitcoin at that point" and then pay taxes if there is a profit. Fujimaki stressed that with the current system "one can not hope for the adoption of payments in virtual currency in the real society", elaborating:
Payments in virtual currency of small amounts should be tax-free and virtual currency payments in the real world should be extended.
What do you think of these four proposed tax changes? Let us know in the comments section below.
Images courtesy of Shutterstock and Takeshi Fujimaki.
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