Japan Declares Sale of Bitcoin Exempt from Consumption Tax

March has been a busy month for Bitcoin in Japan. The country officially recognizes Bitcoin as a method of payment today. While Japan prepares to recognize the digital currency, its long-awaited tax reform bills have also been passed this week. One area the bills address is the consumption tax treatment of digital currencies including bitcoin.

The consumption tax is the tax levied on spending on goods and services by the Consumption Tax Law, a municipal law in Japan.“This system can be considered similar to VAT (value-added tax), GST, or sales tax,” describes Kyoto City Official Travel Guide website.

Deloitte Japan explains that, before the tax bills were passed, digital currencies such as bitcoin “do not fall under the category of exempt sales, and as a result, the sale of virtual currencies in Japan have been treated as taxable for JCT (Japanese Consumption Tax) purposes”.

Currently in Japan, the consumption tax is a flat 8 percent on all items, but it is scheduled to increase to 10% in October 2019.

On March 27, the Japanese National Diet passed the 2017 tax reform bills which include amendments to the Fund Settlement Law, enacted last May. The proposed amendments were agreed by the ruling coalition of Japan last December. The proposed amendments were agreed on by Japan’s ruling coalition last December. The Fund Settlement Law “newly defined “virtual currency” as a means of settlement”, according to Deloitte Japan, which explains:

“The sale of virtual currency as defined under the new Fund Settlement Law be exempt from JCT. This change will apply to sales/purchase transactions performed in Japan on or after 1 July 2017.”

The new rule defines digital currencies as “asset-like values” that “can be used in making payments and can be transferred digitally”, reports Japan Times. Therefore, bitcoin and other digital currencies are no longer liable for consumption tax of 8%. However, being a similar asset, digital currency trading is still liable for capital gains tax.

“Profits from trading bitcoin, when coming from continuous trading for the purpose of generating profit, can be considered as income from business activities or miscellaneous income”, “However, in the case of the sale of bitcoin held for investment purposes it can be considered a capital gain,” explained Bitflyer, Japan’s largest stock exchange.

Source: Bitcoin.com

Image: Pixabay

Disclaimer: InfoCoin is not affiliated with any of the companies mentioned in this article and is not responsible for their products and/or services. This press release is for informational purposes only. Information does not constitute an investment advice or an offer to invest.

You may also like...

Leave a Reply

Your email address will not be published. Required fields are marked *