Japan is one of the most forward-thinking nations on the planet with a population so engrossed with progress that it is on the verge of going extinct in the next 100 years as a result of a catastrophic demographic issue. The fact that most young Japanese are too interested in advanced technologies, instead of focusing on making babies, has given the Japanese government enough room for maneuver in its decision to allow the free circulation of Bitcoin all over the country.
Though the approach is liberal, it has not been painless as the government wishes to fill up coffers on behalf of crypto enthusiasts. The question is:
Who Has To Pay Tax On Cryptocurrency Investment Gains?
Not all are subject to tax on their cryptocurrency investments. Based on the information provided by the tax office of Japan, the following entities are subject to taxation:
- People who receive annual remuneration in excess of 20,000,000 JPY per year.
- People who receive a salary from one place, but receive other miscellaneous income throughout the year that exceeds 200,000 JPY per year.
- People who receive a salary from more than one place, with other miscellaneous income totaling in excess of 200,000 JPY per year after allowable deductions.
- Those receiving any remuneration from a family corporation, shop, interest on a loan made, rental income from real estate or machinery etc.
- Anyone postponing tax on remuneration received via the disaster exemption clause.
Anyone receiving income which is not subject to withholding tax at the source.
In summary, if an entity has received no income throughout the year, and the profit on cryptocurrency investment was less than 200,000 JPY, then no taxes must be paid. Those who file annual tax forms will have to do so in a regular manner as before.
The latest information was released by the National Tax Agency individual taxation section on December 1st, 2017. It is a detailed version earlier announcement, which also stated that Bitcoin profits were termed as “miscellaneous”.
The document also stated there was no need to declare digital currency use on a tax return “for those who have salary income adjusted at year-end, and who have income of ¥200,000 ($1,765 USD) or less by selling or using the virtual currency, if there is no other income.”
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