[2018-02-10] Japanese Crypto Investors To Pay Tax Of Up To 55 Percent On Profits

[Cryptotic]

Japanese cryptocurrency investors will pay between 15 and 55 percent on their profits declared on their annual tax filings this year, Bloomberg reports Thursday, Feb. 8.

The Japanese National Tax Agency had already ruled “last year” that capital gains on transactions of virtual currency are considered “miscellaneous income,” Bloomberg writes.

The tax on cryptocurrency profits is higher than the around 20 percent tax levied on profits from stocks and foreign currencies, with the higher percentage tax applying to those who earn more than 40 mln yen a year (about $367,600).

In comparison, South Korea had announced in Jan. that crypto exchanges will be taxed 24.2 percent, in line with the existing tax policy for corporations.

According to Bloomberg, around 40 percent of Bitcoin (BTC) trading recently has been against the yen, meaning the country will receive a large revenue from taxing crypto.
Bloomberg reports that the Japanese National Tax Agency is creating a database of cryptocurrency investors, potentially to ensure enforcement of the tax laws, as well as retaining teams in Tokyo and Osaka to watch electronic trading.

The US Internal Revenue Service (IRS) also reported today that they have created a 10 person team of investigators aimed at tracking down crypto users that failed to report their profits in their tax declarations.

Japan had recognized Bitcoin as a legal method of payment back in April 2017, a step towards helping the government prevent unregulated exchanges from hacks and mismanagement like the Mt. Gox meltdown in 2014.

https://cointelegraph.com/news/japanese-crypto-investors-to-pay-tax-of-up-to-55-percent-on-profits

[1714127987]

1714127987

[Irvinn]

The size of taxes, of course, is impressive. However, it should be borne in mind that with small profits and tax deductions will be small. A little more than half of the profits are taken as taxes only if the profit is more than 367,000 dollars. I do not even know who can have such a big profit.

[gentlemand]

So who's paying the 55%? I can't find any mention of that.

I feel for the people who got caught up in the Coincheck hack. They're being paid back in JPY which means an involuntary tax bill. I would not be best pleased about that.

[hatshepsut93]

So, as cryptocurrencies become legalized in many countries, user start finding out how many taxes they have to pay when they sell their coins, but this leads to a question - can you legally avoid those taxes if instead of selling coins for a profit you just use them as a currency? If yes, then it can become a big boost for crypto adoption, until governments will close this potential loophole.

[gentlemand]

So, as cryptocurrencies become legalized in many countries, user start finding out how many taxes they have to pay when they sell their coins, but this leads to a question - can you legally avoid those taxes if instead of selling coins for a profit you just use them as a currency? If yes, then it can become a big boost for crypto adoption, until governments will close this potential loophole.

That will completely depend on the country you live in, but in the US and UK at least spending rather than selling is no loophole. You're still liable for the same taxes as a straightforward sale. It's still classed as a disposal.

The US were planning on exempting expenditure up to $600 in value. I don't know how far that got.

[Lucius]

Given the opportunities provided in the world of cryptocurrency,no country will not be so easy to give up collecting taxes on crypto trading&investment.But 55% is too much regardless of how much profit it is,I do not see any sense for big investors to work with crypto and give more then half of the profit to tax.If this is true then Japan will not be so friendly country for investors compared to some other countries.

But as many already know,it would be almost impossible to not pay tax when it comes to BTC-governments slowly tightens maneuvering space for crypto users,it is only matter of time when they will connect all the dots.

[1Referee]

So who's paying the 55%? I can't find any mention of that.

It's a bit unclear the way this article is saying it, so this quote from a Bloomberg article should be clearing it up;

Unlike winnings on stocks and foreign currencies, which are taxed around 20 percent, Japan’s levy on profits from virtual money runs from 15 percent to 55 percent. The top amount applies to people with annual earnings of 40 million yen ($365,000).

In other words, anyone who gains a minimum of 40 million JPY will be subject to a 55% haircut. It's quite harsh to be honest, but if that's the law there, then it's the law. Good thing is that it won't affect the majority of the people there. Professional parties and wealthy individuals are the ones who will be 'affected'. Good thing is that this (if the law doesn't treat spending on goods the same as lust liquidating profits on-exchange) might turn out into something that will give people more incentive to spend their coins. As per my own jurisdiction, I am allowed to do this in order to avoid paying tax. It was even somewhat 'advertised' (explained may be a better term) on TV as being a way to prevent yourself from paying tax over your crypto holdings/profits.

[albos]

How will they track the profits? Someone is trading, someone is just getting paid with cryptocurrency, someone is using them to pay services or products etc...

[Kprawn]

In some countries, people get a tax exemption up to a specific amount.. before the tax kicks in. So you have to subtract your

exemption from your total trading profit, before you work out the total tax levied on that. For example : You only pay capital

gain taxes on the amount after your profit exceed say $10,000. {This is done to cultivate a investment and saving culture

amongst tax payers.} If you tax the whole amount from the start, people will not be incentivised to invest or save some of

their money. Governments also use taxes to punish certain actions {tax on cigarettes & liquor} ..... if they want to punish

Crypto investments.. they would simply tax it to death. 

[Yutard]

How will they track the profits? Someone is trading, someone is just getting paid with cryptocurrency, someone is using them to pay services or products etc...

Also if you trade the altcoins against the bitcoin, and do not cash out in fiat, how do you charge capital gains?

[richardsNY]

I do not see any sense for big investors to work with crypto and give more then half of the profit to tax.

You act like investors are losing big time if they happen to invest in crypto, which isn't the case at all. Sure, 55% as being the highest tax category is very steep, but it won't prevent or demotivate investors from trading and investing in the crypto world. If you end up making that much in profits to fit in the 55% category, you are making a lot profit already, even after the tax deduction. If you make $1 million in profit, it means that you have a net profit of $450k, which is still a fantastic achievement. By your logic it would mean that investors will also miss out on that $450k if they didn't invest, because you think it doesn't make sense. Profit = profit.

[entrepmind23]

Government wouldn't miss the opportunity of getting their share of the profits through tax. 55% tax may be too high but then if you are paying this percentage then it would mean you are earning way higher so if you look at it the positive way then you are a profitable trader which many are only wishing to achieve. We should not try to avoid paying taxes because it is the blood of the government and we are also the one who would benefit from it if the taxes are use correctly. I would be willing to pay tax as long as I have those profits because after all profit is still a profit no matter how big or small it is.

[odolvlobo]

The U.S. can be just about as bad.

39.6% Federal tax on short term gains
12.3% California tax on short term gains
0.9% Medicare Tax

= 52.8%

[J. Cooper]

The size of taxes, of course, is impressive. However, it should be borne in mind that with small profits and tax deductions will be small. A little more than half of the profits are taken as taxes only if the profit is more than 367,000 dollars. I do not even know who can have such a big profit.

I think you shouldn't underestimate the amount of cryptocurrency millionaires that are actively trading. So for them it's easier to net $367,000 in profits annually since their initial investment capacity is a lot bigger. Of course this will target the people who are already rich but u think 55% is a little too much.

[Qartersa]

Japanese cryptocurrency investors will pay between 15 and 55 percent on their profits declared on their annual tax filings this year, Bloomberg reports Thursday, Feb. 8.

The Japanese National Tax Agency had already ruled “last year” that capital gains on transactions of virtual currency are considered “miscellaneous income,” Bloomberg writes.

The tax on cryptocurrency profits is higher than the around 20 percent tax levied on profits from stocks and foreign currencies, with the higher percentage tax applying to those who earn more than 40 mln yen a year (about $367,600).

In comparison, South Korea had announced in Jan. that crypto exchanges will be taxed 24.2 percent, in line with the existing tax policy for corporations.

According to Bloomberg, around 40 percent of Bitcoin (BTC) trading recently has been against the yen, meaning the country will receive a large revenue from taxing crypto.
Bloomberg reports that the Japanese National Tax Agency is creating a database of cryptocurrency investors, potentially to ensure enforcement of the tax laws, as well as retaining teams in Tokyo and Osaka to watch electronic trading.

The US Internal Revenue Service (IRS) also reported today that they have created a 10 person team of investigators aimed at tracking down crypto users that failed to report their profits in their tax declarations.

Japan had recognized Bitcoin as a legal method of payment back in April 2017, a step towards helping the government prevent unregulated exchanges from hacks and mismanagement like the Mt. Gox meltdown in 2014.

https://cointelegraph.com/news/japanese-crypto-investors-to-pay-tax-of-up-to-55-percent-on-profits

See, if you come to think of it, the Japanese government has been quick to respond about the global issue concerning Bitcoin. In fact, by now, they are trying to make money out of it. They see business in it in the form of taxation, tourism & development, in the first place. I see it as a very smart move because then they have looked at the bigger picture rather than just do what like the rest did -- ban it. You see, not only they are tagged as accepting and open-minded in terms of development but also do they make bigger money economically within its control. Otherwise stated, they would rather accept something that is quite impossible to ban totally and at the same time make money out of it rather than banning it and have its people do a workaround over its stiffer regulation.

[Lucius]

I do not see any sense for big investors to work with crypto and give more then half of the profit to tax.

You act like investors are losing big time if they happen to invest in crypto, which isn't the case at all. Sure, 55% as being the highest tax category is very steep, but it won't prevent or demotivate investors from trading and investing in the crypto world. If you end up making that much in profits to fit in the 55% category, you are making a lot profit already, even after the tax deduction. If you make $1 million in profit, it means that you have a net profit of $450k, which is still a fantastic achievement. By your logic it would mean that investors will also miss out on that $450k if they didn't invest, because you think it doesn't make sense. Profit = profit.

You have your own opinion,and you think 55% tax is something normal,but for me it is not in any case-no matter what the profit is.If you work hard and invest your time and money,you take a big risk also,then after all that you think to give away 55% of your profit is make sense?

Such a high tax rate can only be demotivating factor for most investors,but there are also some of them who will think like you.But this is only for big players,let them worry about it-if they are OK with 55% tax it does not mean anything to me in life.

[richardsNY]

You have your own opinion,and you think 55% tax is something normal,but for me it is not in any case-no matter what the profit is.If you work hard and invest your time and money,you take a big risk also,then after all that you think to give away 55% of your profit is make sense?

Such a high tax rate can only be demotivating factor for most investors,but there are also some of them who will think like you.But this is only for big players,let them worry about it-if they are OK with 55% tax it does not mean anything to me in life.

I never said it's normal. I too find tax rates of 55% to be ridiculously high. The thing with the government is that they don't care how hard you work, or how much risk you expose yourself to, they just want you to pay your due taxes as a brave citizen. Believe me, I consider these tax rates to be a legal form of theft from the side of the government, but people don't let it distract themselves. If you look at how the general trading volumes in Japan have been increasing, it doesn't show any sings of traders being demotivated. Wherever you are from, what are the tax rates that apply to you when it comes to your profits?

[Carlton Banks]

I consider these tax rates to be a legal form of theft from the side of the government

If government services were so amazing, people would pay without being physically threatened. It's a protection racket.

[Karartma1]

“Corporations barely pay taxes. The corporate tax rate is already very low, but corporations have worked out an array of complicated techniques so they often don't have to pay taxes at all... The scale of sheer robbery by corporate power is enormous.”
― Noam Chomsky

“Life, Liberty, and the Pursuit of Happiness... but only when you pay your taxes? That means your freedom is rented, leased, & not unalienable.”
― Steve Maraboli

“The collection of taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny.”
― Calvin Coolidge

“Death and taxes in life are certain, knowing how to pay only your fair share is third.”
― Yvette D. Best

[Lucius]

Wherever you are from, what are the tax rates that apply to you when it comes to your profits?

There from where I am BTC is still relatively unknown,especially for the tax office.So if I want to pay the tax on any cryptocurrency profits it become nightmare and the mountain of paperwork.But depending on the status employed / unemployed,and knowing the holes in the law I can pay from 20% and up to 60%.I consider everything above 30% as legal robbery,so best way for me when selling is to do that with someone directly and get cash on my hand.

But I hold most of my coins for future,when times come I will try to find way to pay as much as possible less taxes.If that means I need to move in some other country it will not be a problem.I am sure I will stay away from Japan

[orions.belt19]

So, as cryptocurrencies become legalized in many countries, user start finding out how many taxes they have to pay when they sell their coins, but this leads to a question - can you legally avoid those taxes if instead of selling coins for a profit you just use them as a currency? If yes, then it can become a big boost for crypto adoption, until governments will close this potential loophole.

But wouldn’t be taxes be imposed as well once adoption is made and bitcoin is used a currency? Governments will find ways to generate revenue since bitcoin has been rendering huge sums of money and they would want to have some of it as well. A way for them to do that is to impose some taxes, and they may not stop with income taxes. Mass adoption may introduce a new chapter of regulations.

[1Referee]

But wouldn’t be taxes be imposed as well once adoption is made and bitcoin is used a currency? Governments will find ways to generate revenue since bitcoin has been rendering huge sums of money and they would want to have some of it as well. A way for them to do that is to impose some taxes, and they may not stop with income taxes. Mass adoption may introduce a new chapter of regulations.

It all depends on what your government considers Bitcoin to be when it comes to what taxes you end up paying. If we look at one common standpoint of governments, then it's safe to say that they will probably never put it in the category of currencies, because they don't see it as such, and perhaps that's a good thing for everone in the long run. One way or another, the government is always looking for ways to tax people, and if they think it's justified (in their benefit) that they can introduce a completely new tax policy, then they surely will, regardless of how Bitcoin is being used, or what it is classified as. The government with its tax policies is nothing more than a parasite sucking the life and wealth out of its host.

[Fredyink]

“Corporations barely pay taxes. The corporate tax rate is already very low, but corporations have worked out an array of complicated techniques so they often don't have to pay taxes at all... The scale of sheer robbery by corporate power is enormous.”
― Noam Chomsky

“Life, Liberty, and the Pursuit of Happiness... but only when you pay your taxes? That means your freedom is rented, leased, & not unalienable.”
― Steve Maraboli

“The collection of taxes which are not absolutely required, which do not beyond reasonable doubt contribute to the public welfare, is only a species of legalized larceny.”
― Calvin Coolidge

“Death and taxes in life are certain, knowing how to pay only your fair share is third.”
― Yvette D. Best

Some of them pay taxes and get their money back. Robbery at it's finest.

Wherever you are from, what are the tax rates that apply to you when it comes to your profits?

There from where I am BTC is still relatively unknown,especially for the tax office.So if I want to pay the tax on any cryptocurrency profits it become nightmare and the mountain of paperwork.But depending on the status employed / unemployed,and knowing the holes in the law I can pay from 20% and up to 60%.I consider everything above 30% as legal robbery,so best way for me when selling is to do that with someone directly and get cash on my hand.

But I hold most of my coins for future,when times come I will try to find way to pay as much as possible less taxes.If that means I need to move in some other country it will not be a problem.I am sure I will stay away from Japan

I agree anything above 30% is to much. But better 55% from rich ones. 55% is too high. If there is not even on hole to avoid this one,government would lower it for sure. There are always corrupt ones that don't pay that tax.

[darkangel11]

I consider these tax rates to be a legal form of theft from the side of the government

If government services were so amazing, people would pay without being physically threatened. It's a protection racket.

Cannot agree more.

If you think about it, even percentage based income tax is unjust in its most basic form. If we assume that the more you work the more you earn, the more you work the more you pay in tax, so percentage based income tax is promoting laziness and punishing smart and innovative people.
If we add that those hard workers get into the higher tax bracket and have to give up 50% of their income, it's like slavery. Why aren't people treated the same? Where are those principles of equality that we were supposed to uphold? I see nothing equal in one person paying 15% and the other 50%.

[Rooster101]

This will be the price of legalizing bitcoin and other cryptocurrencies. Many countries including those who already banned the use of cryptocurrencies might be looking for similar option of legalizing virtual currencies and at the same time impose regulations and taxes in every transaction or profits. A tax of up to 55% might be too much in my country if the government decided to impose taxes in cryptocurrencies.

[FirEaSeA]

That 55% is ridiculous. It's best for them to move to a country that asks less than 10%.

[btrice7]

Is not it a lot of money to pay between 15% and 55%?I started to be afraid of the states.

[tee-rex]

The size of taxes, of course, is impressive. However, it should be borne in mind that with small profits and tax deductions will be small. A little more than half of the profits are taken as taxes only if the profit is more than 367,000 dollars. I do not even know who can have such a big profit.

I think you shouldn't underestimate the amount of cryptocurrency millionaires that are actively trading. So for them it's easier to net $367,000 in profits annually since their initial investment capacity is a lot bigger. Of course this will target the people who are already rich but u think 55% is a little too much.

This will likely cause a massive tax evasion in the future. I don't mean anything outright illegal but rather something more like the "loopholes" people are discussing here. For example, you can become a tax resident of a country which has a soft tax regime in respect to cryptocurrencies (countries like Italy or Denmark) and officially pay (or not pay) your Bitcoin capital gains taxes there, thus avoiding paying the same taxes in Japan. Though I don't know if Japan has double-tax agreements with these countries.

[darkangel11]

This will likely cause a massive tax evasion in the future. I don't mean anything outright illegal but rather something more like the "loopholes" people are discussing here. For example, you can become a tax resident of a country which has a soft tax regime in respect to cryptocurrencies (countries like Italy or Denmark) and officially pay (or not pay) your Bitcoin capital gains taxes there, thus avoiding paying the same taxes in Japan. Though I don't know if Japan has double-tax agreements with these countries.

Of course! And can you really blame people for doing it? If you had a friend that agreed to help you move things around and you threw him a 20kg bag, he'd most likely take it and come back for another one. If the bag was 40kg he'd complain about it being heavy but still keep going. If you asked him to carry 60 kg he'd be like hell no! I don't want to hurt myself! Taxes are a burden that should be made as light and easy to carry, so that people won't have the reason to complain and avoid them. Japan is overdoing it same as those countries that are imposing extremely high taxes on the rich, like France.

[kryptorian]

This will likely cause a massive tax evasion in the future. I don't mean anything outright illegal but rather something more like the "loopholes" people are discussing here. For example, you can become a tax resident of a country which has a soft tax regime in respect to cryptocurrencies (countries like Italy or Denmark) and officially pay (or not pay) your Bitcoin capital gains taxes there, thus avoiding paying the same taxes in Japan. Though I don't know if Japan has double-tax agreements with these countries.

Of course! And can you really blame people for doing it? If you had a friend that agreed to help you move things around and you threw him a 20kg bag, he'd most likely take it and come back for another one. If the bag was 40kg he'd complain about it being heavy but still keep going. If you asked him to carry 60 kg he'd be like hell no! I don't want to hurt myself! Taxes are a burden that should be made as light and easy to carry, so that people won't have the reason to complain and avoid them. Japan is overdoing it same as those countries that are imposing extremely high taxes on the rich, like France.

Can't agree more with you guys!

Another example definitely worth mentioning here is Sweden with their so-called Scandinavian socialism. This country is notoriously famous for their insanely high tax burden that many people living there find too heavy or even inappropriate. In the past, a lot of public figures like celebrated sportsmen such as Björn Borg moved to live in other European countries where they wouldn't have to pay extortionate taxes on their high earnings.

With that said, we should however remember that there is an optimal level of tax burden in the economy (think Laffer curve here), and it may be a lot higher than what some or even most people may think. And that could be one of the reasons why the Japanese government levies so high taxes given that the local population is law-abiding in general.

[CryptoBry]

After all the dust is settled and the bottomline of all the bravado will always be taxation. Tax and death are two of the most unavoidable things in this world. The more tax the better. We are just hoping that maybe soon there can be fairer percentage of tax levied against income in cryptocurrency trading as we know that the risks involved is also potentially great. It should be treated just like any other type of investment such as stocks or forex and must never be given another category as far as taxation is concerned. One thing is for sure...in lieu of recognition tax is inevitable.

[odolvlobo]

With that said, we should however remember that there is an optimal level of tax burden in the economy (think Laffer curve here), and it may be a lot higher than what some or even most people may think. And that could be one of the reasons why the Japanese government levies so high taxes given that the local population is law-abiding in general.

The optimal level of tax burden is 0. The Laffer curve describes the maximum level of tax generation. The goals are not the same.

[Samarkand]

...
Of course! And can you really blame people for doing it? If you had a friend that agreed to help you move things around and you threw him a 20kg bag, he'd most likely take it and come back for another one. If the bag was 40kg he'd complain about it being heavy but still keep going. If you asked him to carry 60 kg he'd be like hell no! I don't want to hurt myself! Taxes are a burden that should be made as light and easy to carry, so that people won't have the reason to complain and avoid them. Japan is overdoing it same as those countries that are imposing extremely high taxes on the rich, like France.

Great analogy, I will use this one for sure in future discussions (I´m out of sMerits currently, but I
hope that someone else will merit you for this beautiful analogy).

Another aphorism with regard to taxation that I really like:
"If stealing 100% of the working power of someone is called slavery...
at what percentage does it stop being slavery?".

Regarding the actual topic I think that these high-tax countries like Japan and France
are simply choking the growth of their economy. There is a reason why businesses thrive
in a low-tax environment and businesses relocate from high-tax countries all the time.

[Emin90]

I, too, think that this very many for taxes. You can do less, even if the user who earns more than $ 300,000 will pay 55% of it will be very frustrating because it's an impressive figure.I hope they will have some loophole to escape from such high taxes

[pixie85]

Great analogy, I will use this one for sure in future discussions (I´m out of sMerits currently, but I
hope that someone else will merit you for this beautiful analogy).

Another aphorism with regard to taxation that I really like:
"If stealing 100% of the working power of someone is called slavery...
at what percentage does it stop being slavery?".

The main difference between slavery and contribution is the choice. As long as you can choose how much you want to give it's not slavery. If the contribution is forced upon you it usually means slavery because you're working for the benefit of others.
Taxes are slavery despite the amount because if you don't pay up you'll eventually get locked up. To simplify they are willing to take away your rights for not working for them.

Regarding the actual topic I think that these high-tax countries like Japan and France
are simply choking the growth of their economy. There is a reason why businesses thrive
in a low-tax environment and businesses relocate from high-tax countries all the time.

You are correct. If you allow people to make money they will have to use the profits to benefit the economy. They will hire people to build a house, dig a pool, buy cars, pay for fuel. They will send their kids to better schools, buy more food. They will also hire more people to work for them.

[Mikhail 777]

This of course is not very good news for the Japanese guys, it will be necessary to look for the circumvention of the laws. If you pay this tax, then nothing will remain. The market is very unstable and it's bad.

[Emin90]

As if the State is not interested in the well-being of citizens and always trying to snatch a piece and in this case, this piece is very large.All the while trying to climb into the pocket of citizens and you are right that citizens would spend money in their country and it is better for the economy. But such actions have forced open a business in those countries where the tax is much lower!

[tee-rex]

Great analogy, I will use this one for sure in future discussions (I´m out of sMerits currently, but I
hope that someone else will merit you for this beautiful analogy).

Another aphorism with regard to taxation that I really like:
"If stealing 100% of the working power of someone is called slavery...
at what percentage does it stop being slavery?".

The main difference between slavery and contribution is the choice. As long as you can choose how much you want to give it's not slavery. If the contribution is forced upon you it usually means slavery because you're working for the benefit of others.
Taxes are slavery despite the amount because if you don't pay up you'll eventually get locked up. To simplify they are willing to take away your rights for not working for them.

In fact, that remains to be seen. For example, when you steal from somebody, they can demand you pay back what you took. Would you call that slavery too? Well, I think regular thieves may certainly do, but we all understand (I hope) that this is not the case. But taxes are like that, at least they claim to be them like that. Basically, with taxes you pay back what you have taken or consumed as public good.