A committee of tax experts seeks to advise the government of the Asian country on the process of simplifying taxes on cryptocurrencies.
The committee met earlier this week to discuss the proposal to change the current cryptocurrency tax filing system. Part of the problem, according to the committee, lies in the fact that calculating the profits of cryptocurrency for tax purposes is a complex issue and this discourages some owners of digital assets from declaring them when paying their taxes.
Many cryptoactive holders in Japan have already complained about the complexity of the tax system imposed on cryptocurrencies. It is worth to highlight that a petition on Change.org that sought to request a simplification of the system managed to get more than 11 thousand signatures.
The reason is that the National Tax Agency of Japan has seven tax ranges, with rates ranging from 5 percent to 45 percent based on profits at present. The taxes to the inhabitant, one of the most important progressive taxes, are charged by the prefectural and municipal governments at a rate of 10%.
This means that people with more earnings pay the highest percentage. For example, investors who generate annual profits of more than 40 million yen (approximately US $ 365,000) pay a 55% rate on their cryptocurrency revenues (counting municipal taxes).
This presents a strong incentive for these citizens to try to evade taxes or not declare digital assets. In this sense, the committee believes that simplifying the process of filing taxes on cryptocurrencies will increase tax collection since it would discourage tax evasion.
Halfway through the year, the country’s Deputy Prime Minister proposed reducing taxes to subtract higher to 20%, similar to that applied in the shares and currencies.
By Emanuel Andrade