Japan’s Crypto Traders May Face Closer Scrutiny Over Tax Avoidance
Japanese tax authorities are planning to take action on the under-reporting of cryptocurrency-based profits.
According to a report by The Asahi Shimbun on Wednesday, the newspaper’s sources have said that larger cryptocurrency transactions could be tracked in an effort to identify trades that are not being declared for tax purposes.
The potential move has been prompted by the finding that some 50 traders and 30 firms in Japan had not declared cryptocurrency income worth over 10 billion yen ($92.3 million) over the last few years, the sources said.
The level of tax under-reporting is likely due to the high rate at which crypto earnings are taxed. Classified as “miscellaneous income,” crypto gains are taxed at up to 55 percent. By comparison, earnings from trading stocks are taxed at 20 percent.
According to the report, an investigative team at the Tokyo Regional Taxation Bureau asked some cryptocurrency exchanges to submit clients’ transaction data in 2018, allowing it to build a list of accounts that made sizable earnings
That, along with data collected by other regional tax offices around Japan, suggested to authorities that traders with around 7 billion yen ($9.26 million) of such income had attempted to conceal it for tax purposes.
As such, Asahi Shimbun says the tax authorities may file criminal complaints over tax evasion against traders who hid larger incomes or employed illicit means to do so.
Yen and bitcoin image via Shutterstock