Japanese Government Looking To Simplify Crypto Tax Filings

In the latest cryptocurrency news, a Japanese taxation policy committee recently held a debate in hopes of finding a means to simplify all taxes related to digital assets. The news came after reports suggest that the tax filing regime, which was put in place for all Japanese citizens, proved to be quite complex.

Simplifying The Process

The officials from the committee, which is basically responsible in advising the Japanese government on policy, explained that there was no need to adjust the procedure. The proposed adjustment was originally meant to stimulate a more thorough reporting of all cryptocurrency gains.

“The environment should be adjusted so that tax returns can be simplified,” the organization was quoted as saying.

It is worth noting that Japan has sought to future-proof its economy, and it plans to do so by using policy regulations designed specifically to cryptocurrency. Interestingly, the Land of the Rising Sun sees the industry of digital currency as a booming market locally, especially since companies are starting to take advantage of complementary regulation.

Taxation obligations, while complex, are also stringent, with consumers technically required to file a tax return on any annual gains over 200,000 yen ($1780. As U.S. authorities previously warned while examining their own reporting difficulties, the number of consumers who file crypto returns is minimal. As for the proportion of those who do it accordingly and by the book, it is reportedly in a spiral rate.

Dedicated Tools Needed

The U.S. has since seen dedicated tools appear to help investors file tax returns. These tools, in particular, are specifically geared to the country’s tax authority, which is the Internal Revenue Service (IRS). Japan, on the other hand, lacks a similar easily-available mechanism. Nonetheless, the committee is confident it would succeed in one way or another.

In the future, officials said, the simplified regime should also allow for the easy calculation of cryptocurrency holdings as regards phenomena such as inheritance and donation tax. It may not use the same tools as the U.S. mentioned and recommended, the Japanese officials are enthusiastic that their own method should work out accordingly.

The system should “be able to grasp the asset price appropriately,” they added.

Currently, profits from the sale of digital assets in Japan fall under “miscellaneous income.” A sliding tax rate from 15 to 55 percent is applied also, though it really depends on the actual amount of gains above a threshold of 200,000 yen per year, or about $1,800.