The Japan Tax Agency (NTA) has developed a policy that requires companies and individuals to declare profits they make from cryptocurrency transactions. The new policy is based on the principle of “simplification” and “automation” of taxable income calculations and comes into force on July 15.
The Japan Tax Agency, along with the Financial Services Agency and companies engaged in cryptocurrency activities, is introducing a simplified method of filing a tax return into the tax system. The new method allows you to automatically calculate the taxable base from cryptocurrency transactions and the tax payable.
According to the new requirements, income received from cryptocurrency transactions is classified as “other assets” and is subject to mandatory tax declaration. To calculate the tax base, the NTA required individual investors and companies to use software it developed to automatically calculate profit/loss and send the calculation results to the tax return help desk.
A simplified tax return is filed by both individuals and legal entities whose annual income from cryptocurrency trading exceeds $1,800.
Thus, the innovations do not concern small investors, but are intended mainly for crypto companies.
The NTA hopes that the new rules will help solve the main problems associated with determining profits due to the different methods of storing transaction histories by crypto platforms. The NTA reform and automation of profit and loss calculations is designed to simplify tax documentation and avoid tax evasion.
It should be noted that this is not the final version of the tax reform of the crypto industry in the country. Prior consultations with the FSA regulator, the Japan Blockchain Association and the NTA provided an opportunity for each organization to express its opinion on regulatory issues. The Tax Agency plans to continue such consultations and improve the tax policy of the cryptosphere.
Last month, a proposal to change the taxation policy for cryptocurrency activities came from Japanese Deputy Prime Minister Taro Aso. He proposed establishing a general tax rate for all cryptocurrency transactions.
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