TOKYO: Japan’s National Tax Agency has caught onto the cryptocurrency mania gripping the world and investors in digital coins are about to pay the price. Having ruled last year that capital gains on these transactions are a form of “miscellaneous income,” investors are now required to declare their profits in annual tax filings due Feb. 16-March 15.
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).
With no capital gains tax on long-term investments in virtual money in some jurisdictions including Singapore, a handful of cryptocurrency-rich investors have already left Japan, said Kengo Maekawa, chief executive of Shiodome Partners Tax Corp. Maekawa said his firm has had an influx of clients, most of them in their 30s and 40s, seeking tax advice on virtual-currency income.Hiroyuki Komiya, who runs a blockchain technology consulting firm in Tokyo, said he managed to cut back on “a few million yen” worth of taxable income by using an “overall average” rather than a “moving average” to do his calculations. The government hasn’t clarified certain details, so you’re left unsure whether you’ve got it right or not,” said the 36-year-old. Komiya also complained that he might have to sell some of his digital coins to get the hard cash he needs to pay his taxes.
