Cryptocurrency traders in Japan currently can be taxed as high as 55% on their profits. However, the country’s Deputy Prime Minister, Taro Aso, wants to change how crypto transactions are taxed, from a progressive rate to a uniform rate.
Also read: Yahoo! Japan Confirms Entrance Into the Crypto Space
Aso Wants to Change Crypto Taxation
The Japanese Deputy Prime Minister and Minister of Finance, Taro Aso, said at the Upper House budget committee meeting on June 25, as reported by Reuters:
The profits gained by virtual currency transactions should be changed from current ‘miscellaneous income’ to ‘declaration separate taxation.’
Currently, capital gains from crypto transactions are taxed as miscellaneous income. Accounting software company Freee described, “Miscellaneous income is subject to comprehensive taxation, and the tax rate is decided according to the amount combined with other income such as salary income.”
The National Tax Agency (NTA) explained that Japan has seven income tax brackets, with the tax rates ranging from 5% to 45% based on earnings. On top of the progressive tax rates, inhabitant taxes are levied in Japan by prefectural and municipal governments at the rate of 10%. The Policy Research Institute of the Japanese Ministry of Finance commented:
The maximum income tax rate now stands at as high as 55% including 10 percentage points for the local individual inhabitant tax.
Under the current rule, cryptocurrency traders could, therefore, pay up to 55% in capital gains tax.
Moving to Uniform Tax Rate
The Deputy Prime Minister’s proposal would enable crypto profits to be taxed at a uniform rate, the same presently enjoyed by stock traders. Pwc explained that in Japan:
Capital gains from sales of certain securities (including shares/equity interest in corporations, warrant bonds, etc.) are taxed separately from other sources of income at a flat rate of 20.315% (i.e. 15.315% national tax and 5% local inhabitant’s tax).
Ever since the Japanese government declared crypto profits are taxed as miscellaneous income, many industry participants have criticized this tax treatment. 11,786 of them soon signed a petition on Change.org calling for the NTA to tax crypto profits like they do stocks.
Recently, news.Bitcoin.com reported that 331 taxpayers with miscellaneous incomes of 100 million yen (~US$914,000) and over from sources other than public pensions in Japan declared cryptocurrency income.
As Taro Aso, the 59th Prime Minister of Japan, suggested the change, he also conveyed his doubt that people will understand the reason for the change. “From the viewpoint of the international nature of virtual currency uncertainty and tax fairness, etc,” Reuters quoted him expressing that it is doubtful “public understanding can be obtained” for the tax rate “equal to a uniform rate of 20%.”
How do you think Japan should tax crypto profits? Let us know in the comments section below.
Images courtesy of Shutterstock, Daily Mail, and the NTA.
Need to calculate your bitcoin holdings? Check our tools section.
The post Japan Wants to Scrap Its Progressive Crypto Tax Rate appeared first on Bitcoin News.
Source: Bitcoin.com
Original Post: Japan Wants to Scrap Its Progressive Crypto Tax Rate
