Japanese Crypto Investors Flee Capital Gains Taxation of up to 55%

Japanese Crypto Investors Flee Capital Gains Taxation of up to 55%

Reports have indicated that some investors are relocating in search of alternative taxation regimes in order to avoid heavy capital gains taxes. Japan currently taxes capital gains on profits derived through virtual currency trading at between 15% and 55%.

Also Read: India’s Tax Department Issues Notices to 100,000 Crypto Investors

Japanese Crypto Traders Prepare for Tax Season

Japanese Crypto Investors Flee Capital Gains Taxation of up to 55%Japan’s cryptocurrency traders are bracing for the oncoming Japanese tax season, which runs from February 16th until March 15.

In Japan, all cryptocurrency earnings are required to be reported as ‘miscellaneous income’, incurring capital gains taxation of between 15% and 55% due to virtual currencies being legally classified as ‘property’.

Some traders have criticized the income brackets chosen by the National Tax Agency, with the top bracket applying to payers with an annual income of 40 million yen (approximately 375,000). By contrast, the top bracket is charged only 20% for income derived from foreign exchange or stock market trading.

Japanese Whales Seek Alternative Tax Jurisdictions

Japanese Crypto Investors Flee Capital Gains Taxation of up to 55%The heavy taxes faced by large-scale bitcoin traders has prompted a number of Japanese cryptocurrency traders to explore relocating to jurisdictions offering more lenient taxation on earnings derived through virtual currencies.

According to Bloomberg, the chief executive of Shiodome Partners Tax Corp, Kengo Maekawa, indicated that “a handful of cryptocurrency-rich investors have already left Japan.” Mr. Maekawa stated that his firm has recently experienced a surge in clients in their 30s and 40s seeking tax advice on income derived from cryptocurrencies.

Some traders have also complained that certain aspects of Japan’s present tax requirements regarding bitcoin are unclear. Hiroyuki Komiya, the manager of a Tokyo-based distributed ledger technology consulting firm, stated that “The government hasn’t clarified certain details, so you’re left unsure whether you’ve got it right or not.” Mr. Komiya stated that he was able to reduce his taxable income by “a few million yen” when using an “overall average” rather than a “moving average” when conducting calculations.

What country do you think offer the best tax regime for cryptocurrency traders? Share your thoughts in the comments section below!


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Dubai Issues License to Cryptocurrency Firm

Dubai Issues License to Cryptocurrency Firm

The largest free economic zone in the UAE, with zero percent personal and corporate income tax, has started issuing licenses to firms trading cryptocurrencies. The first license has been issued to a gold trader that has recently started offering cryptocurrency services.

Also read: Japan Cracks Down on Foreign ICO Agency Operating Without License

Attracting Crypto Businesses

UAE’s Largest Free Economic Zone Issues License to Cryptocurrency FirmThe Dubai Multi Commodities Centre (DMCC) is a government entity established in 2002 to enhance commodity trade flows through Dubai. DMCC Free Zone is the largest and fastest growing free economic zone in the UAE.

“We perform a range of roles which continue to position Dubai as the preferred destination for global commodities trade and DMCC as the world’s No.1 Free Zone,” offering zero percent personal and corporate income tax, the center’s website states. Today, more than 14,100 multinational corporations and startups call DMCC home, with almost 90,000 people living and working there.

UAE’s Largest Free Economic Zone Issues License to Cryptocurrency FirmThe Centre has started issuing licenses to allow firms trading in cryptocurrencies to operate from its free zone, Thomson Reuters Zawya reported on Monday.

DMCC’s executive director for commodities, Sanjeev Dutta, told the publication that the Centre is “beginning to facilitate” a market in cryptocurrencies which, he acknowledged, is unregulated. Citing that firms looking to set up in the zone would be considered on a “case-by-case” basis, he elaborated:

To me, what is important is the fact that you are still evaluating it as part of your innovation strategy. You are not saying ‘no’ to something. You are not saying ‘yes’ either, but you are exploring, so you are clearly ahead of the others when the time to make a decision comes.

Cryptocurrencies as Commodities

DMCC is a member of the Global Blockchain Council, which began as a Dubai Smart City project and has 46 member organizations globally today. The Centre’s director of innovation hub, Franco Bosoni, said that a global consensus is emerging which favors classifying cryptocurrencies as commodities, the news outlet detailed and quoted him explaining:

DMCC’s view is that these [cryptocurrencies] meet the test of a commodity. They’re priced based on supply and demand, produced and sold globally at a uniform quality and (are) indistinguishable between products.

Wai Lum Kwok, head of capital markets for Abu Dhabi Global Markets Regulatory Authority, told the publication on Sunday that the regulator is “reviewing and considering the development of a robust, risk-appropriate regulatory framework” for crypto exchanges and intermediaries. Emphasizing that no timeframe has been set, he added:

As we develop our framework, we will also want to check in and have the conversations with, for example, US regulators, Japanese regulators and so on and so forth, so that there is some alignment of approach to avoid any regulatory arbitrage.

First License Issued

UAE’s Largest Free Economic Zone Issues License to Cryptocurrency FirmThe first license for the Free Zone reportedly went to Regal Assets, a gold trader and storage provider with offices in the US, Canada, and the UAE. The company added cryptocurrencies to its product line at the end of last year, offering brokerage services and an insured, high-security cold storage service for bitcoin, ether, bitcoin cash, ethereum classic, ripple, and dash.

According to Bloomberg, “Dubai gold trader Regal RA DMCC is the first company in the Middle East to get a license to trade cryptocurrencies.” The news outlet quoted DMCC acknowledging in a statement, “The company will offer storage of bitcoin, ethereum and other cryptocurrencies in a vault located in DMCC headquarters in Almas Tower in Dubai.”

DMCC Executive Chairman Ahmed Bin Sulayem was quoted by the publication, “At the heart of DMCC’s long-term strategic growth plan is the use of technology and innovation to disrupt and connect new markets, industries and customers,” adding that “the announcement today embodies this approach.”

Do you think more crypto companies will move to this free economic zone? Let us know in the comments section below.


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India’s Tax Department Issues Notices to 100,000 Crypto Investors

India's Tax Department Issues Notices to 100,000 Crypto Investors

India’s Income Tax Department recently announced that it has issued notices to 100,000 cryptocurrency investors. The announcement came in light of government surveys into the operations of multiple leading Indian exchanges that have revealed widespread tax evasion on the part of India’s cryptocurrency traders.

Also Read: India’s Finance Minister Confirms Crypto Not Recognized as Legal Tender, Media Panics

Indian Cryptocurrency Investors Accused of Tax Evasion

India's Tax Department Issues Notices to 100,000 Crypto InvestorsIndia’s Central Board of Direct Taxes (CBDT) chairman, Mr. Sushil Chanda, recently told reports that the country’s Income Tax Department has issued approximately 100,000 notices to cryptocurrency investors.

“People who have made investments [in cryptocurrency] and have not declared income while filing taxes and have not paid tax on the profit earned by investing, we are sending them notices as we feel that it is all taxable,” said Mr. Chanda, whilst speaking at an ASSOCHAM event in New Delhi.

The chairman stated that the Income Tax Department had conducted numerous surveys into the operations of the country’s cryptocurrency exchanges in order to ascertain the scale of the tax evasion being conducted.

“We found out that there is no clarity on investments made by many people which means that they have not declared it properly,” said Mr. Chandra, adding “We have informed all the DGs (Director Generals of Income Tax) across India, they are issuing notices and so that would be taxed.”

India to Crack Down on Use of Cryptocurrencies as “Payment System”

India's Tax Department Issues Notices to 100,000 Crypto InvestorsThe announcement comes shortly after S.C. Garg, India’s Economic Affairs Secretary, made comments discussing the country’s regulatory path with regard to cryptocurrencies. Speaking to CNBC, Garg stated that the government panel tasked with analyzing issues pertinent to “crypto assets” is expected to deliver its report by the end of the fiscal years, which ends on March 31st.

Reaffirming finance minister Arun Jaitley’s comments from last week, Garg also emphasized the government’s intention to crack down on the use of cryptocurrency as a means of payment, stating that “The government will take steps to make it illegal as a payment system.”

Do you think India will be successful in its efforts to reduce the use of cryptocurrency as a means of payment? Share your thoughts in the comments section below!


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The IRS Takes Its Tax Evasion Hunt to the Blockchain

The IRS Takes Its Tax Evasion Hunt to the Blockchain

As the adage goes, there are two certainties in life: death and taxes. For any U.S. bitcoiners considering wriggling out of the latter, that task just got a little harder. The country’s Internal Revenue Service has revealed that it’s bolstering its armory to make it easier to track down crypto tax evaders. It’s now assembled a crack team of blockchain forensic experts to help claim its pound of flesh.

Also read: Bitfury as Big Brother: Mining Company Tracks Bitcoiners

The Taxman Tools Up

U.S. citizens have known for some time that the IRS has been shining its spotlight on the crypto space. The first flickers emerged over a year ago, after the tax body subpoenaed Coinbase for its user data in a case that wound up in the courts before the IRS ultimately prevailed, securing the details of over 15,000 exchange customers. That spotlight has gotten discernibly brighter now that the IRS has successfully enlisted heavyweights with the tools and skills to pry into blockchain activity.

The IRS Takes Its Tax Evasion Hunt to the Blockchain
Don Fort

In an interview, IRS chief Don Fort revealed how the Criminal Investigation Division, which he heads, has added 10 new investigators. “It’s possible to use Bitcoin and other cryptocurrencies in the same fashion as foreign bank accounts to facilitate tax evasion,” he said. Bloomberg reports how the Criminal Investigation Division has actually lost key staffers since 2011 on account of budget cuts. The recruitment of 10 new staffers will see the division returned to full strength, complete with its own crew of blockchain experts.

Forensic Tools for a Digital Age

The range of blockchain tools available to U.S. investigators is getting more numerous and sophisticated. Companies such as Bitfury have earned ire from the crypto community for their willingness to work hand in glove with law enforcement to scrutinize blockchain activity, clustering related addresses together and highlighting suspicious activity. The company’s advisor, Jason Weinstein, a former DOJ investigator, crowed: “Having a traceable public ledger of every bitcoin transaction ever conducted allows law enforcement to ‘follow the money’ in a way that would never be possible with cash.”

The IRS Takes Its Tax Evasion Hunt to the BlockchainMost countries expect their citizens to pay take on cryptocurrency, so it is not atypical for an agency such as the IRS to take a proactive stance on bitcoin. U.S. agencies are famed for their unparalleled investigative powers, though, and tentacles that extend way beyond home turf. In fact, the IRS recently wrapped up a successful investigation into U.S. assets concealed in Swiss bank accounts. If it has reason to believe citizens within its jurisdiction are hiding their cryptocurrency in overseas exchanges, it will have no qualms about following suit.

When it comes to taxation, U.S. bitcoiners can roughly be split into three groups: those (begrudgingly) intending to pay, those hoping the IRS will spare them on account of having bigger fish to fry, and those willing to do whatever it takes not to pay, even if that means moving to Puerto Rico. While the IRS lacks the resources to pursue every U.S. citizen with a stake in cryptocurrency, the tide is evidently turning. The days of wide scale cryptocurrency tax avoidance are surely numbered.

Do you think the IRS will start coming after U.S. bitcoiners in bulk, or is it simply trying to scare crypto holders into paying tax? Let us know in the comments section below.


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