Revised Tax in Effect From Today In Japan, Giving Residents ‘Access to Global Markets’On Saturday, July 1, the revised consumption tax law went into effect throughout Japan, and bitcoin transactions no longer incur consumption tax of 8%. On the same day, Australia also ended bitcoin double taxation. Bitcoin.com talked to Yuzo Kano, CEO of the largest Japanese bitcoin exchange by volume Bitflyer, to find out the real implications of this change in Japan.
Bitcoin Exempt from Consumption Tax in Japan
The Japanese government has approved the exemption of digital currencies, such as bitcoin, from consumption tax. The “Cabinet Order for Partial Revision of the Order for Enforcement of the Consumption Tax Act” went into effect on July 1. Bitflyer explained:
"Effective July 1, 2017, virtual currency transactions [purchases / sales] will become exempt from consumption tax."
The Japanese consumption tax rate is currently 8%, which was scheduled to increase in April of this year. However, on June 1, 2016, Prime Minister Shinzo Abe announced that “the rise in the consumption tax to 10% and the introduction of the reduced tax rate would be postponed until October 2019,” Japan External Trade Organization detailed.
While the revised law abolishes consumption tax on digital currencies, there remain other taxes such as personal income tax, capital gains tax, or corporate income tax that they are subject to. “If income obtained from virtual currency is earned at the individual level, this is (per Japanese taxation standards) treated as miscellaneous income and subject to tax on aggregate income,” Bitflyer detailed. “For corporations, it is treated as operating revenue.”
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