Currently, the operation of the cryptocurrency traders in Japan may be taxed up to 55% of the amount of profit. However Deputy Prime Minister Taro ASO (Taro Aso) wants to change the method of taxation of cryptocurrency transactions to a single progressive rate.
Deputy Prime Minister of Japan and Minister of Finance Taro ASO said on 25 June at the meeting of the budget Committee of the Upper house:
«The profit generated as a result of transactions with the virtual currency, should be changed from the current «other income» on the «Declaration of separate taxation».
Now capital gains from cryptocurrency transactions is taxable as other income. Company Freee notes: «other income subject to comprehensive taxation, and the tax rate is determined in accordance with the amount combined with other income such as income from wages.»
The national tax Agency (NTA) explained that in Japan there are seven steps in the income tax, with tax rates ranging from 5% to 45% based on revenue. In addition to the progressive tax rates, prefectural and municipal governments also levy a tax on the population at a rate of 10%. Institute of policy studies of the Ministry of Finance of Japan commented:
«The maximum tax rate now is 55%, including 10% tax from the population».
Under current rules, cryptocurrency traders can pay up to 55% tax on capital gains.
The proposal of the Vice Prime Minister will allow to impose the income from operations with cryptocurrencies at the same rate as a stock traders. In Japan, the profit from the sale of certain securities (including shares/a stake in corporations, bonds with warrants, etc.) is taxed separately from other sources of income at a fixed rate of 20.315% (i.e., 15.315% national tax and 5% local tax on the population).
Since then, the government of Japan has announced that profits from cryptocurrencies is taxed as «other income», many industry participants have criticized that decision. 11 786 of them soon signed a petition on Change.org calling on NTA to regard the profits from cryptocurrency in the same way as the income of stock traders.
When Taro ASO has proposed the change, he also expressed doubt that people will understand its cause. «From the point of view of the international character of the uncertainty surrounding the virtual currency and the tax justice it is doubtful that society will understand and support the levy of a single rate of 20%».
The National tax Agency of Japan, to profit from trading digital currencies, it was decided
to qualify as «other income» in February of this year. The maximum rate of 55% is applied for the achievement of comprehensive income 40 million yen, or $365 thousand.