Japan Taxation Committee Urges National Assembly to Simplify Crypto Tax Reporting Laws

For the last couple of years, governments worldwide have started deliberating on how they should tax digital currency gains. However, most regulatory approaches so far have been confusing to crypto users, as they lack standardization and do not offer clear reporting guidelines.

Japan is in a similar situation, since its tax filing system caused confusion amongst users and led to an unsatisfactory reporting of crypto-based profits. Now, according to recent reports, Japan’s Tax Investigation Committee, is discussing methods via which tax reporting for digital currency holders can be simplified.

With this in mind, members of the committee held a meeting on Wednesday, where they addressed the country’s National Assembly, asked them to deliberate on the issue, and provided several solutions.

At this moment in time, the crypto tax system is plagued by on-going confusion over how gains are calculated, and the various types of profit the current regulation has created. As such, employees who are paid in digital currencies and earn over 200,000 yen on a yearly basis, must declare the revenue as income, and pay the afferent income tax. Investors are also included in the current tax system, since they are obliged to report all profits obtained from digital currency exchanges. It’s important to point out the fact that back in 2017, the Japanese government decided to remove the 8% consumption tax associated with bitcoin transactions.

According to the Japanese digital currency community, confusion is biggest when crypto users are forced to keep track of their transaction history, on all trading platforms. Additionally, as digital currencies are volatile, gains can increase or decrease depending on the market. Because of this, the committee believes that a simpler, all-inclusive tax law should be created.

Minoru Nakazato, who is the President of the Japanese Tax Investigation Committee, mentioned that the internet shared economy also lacks clear taxation guidelines. According to him, “The environment should be adjusted so that tax returns can be simplified. Since it is necessary to take into consideration frameworks other than the taxation system and business practices, we will hold a small meeting of experts to deepen the discussion while listening to outside opinions.”

It is important to keep in mind that Japan isn’t the only country dealing with this issue. Other nations, like the United States, have also implemented complex taxation systems that users find confusing. Because of this, very few crypto holders decide to report their income – not because they want to evade taxation, but rather the reporting guidelines aren’t clear.

It is expected that the Japanese National Assembly will soon start working on a new set of laws that would clear confusion, and lead to a more streamlined tax reporting system.