Japan to Tax ALL CRYPTO PROFITS Including Transfers/Gains Made from Exchanges Between Coins.
The National Diet Building, Tokyo, Japan.
In a not suprising, and yet still suddenly disturbing move, Japan has once again announced that all crypto gains will be taxed, including all transfers, trades, forks, and purchases. Mining profits will be taxed as well.
This information is not really new, per se, but the frequency of the reminders, as my friend Jon Southhurst at bitsonline has pointed out in his latest article, is telling. The state is not happy that money is being made without their hands in the pot. This comes as no surprise to those who know the score. It still sucks, though, to be reminded of this harsh reality at a time when crypto and the free market are gaining such massive acceptance and momentum.
The newest information released by the Kokuzeicho (National Tax Agency) makes it clear that all profits gained from the use of cryptocurrencies, whether by mining, exchange, acquisition of coins created by forks, or purchase of goods, will be taxed at the time of conversion to fiat.
Is your head spinning yet? It should be.
Imagine purchasing crypto token X today. It is worth 1 USD. Let’s say it goes up in value to five dollars and you then decide to purchase a bit of crypto token Y with your gains. Now crypto token Y must be thought of as a result and continuation of the now divided value of X, and any fluctuations in the value of this token Y will actually be fluctuations in the value of the now exchanged percentage of token X. Meanwhile, the rest of the original token X, not used to purchase some of token Y, must be accounted for separately. When it comes time to pool your X and Y coins together and purchase that sweet new sweater you’ve been eyeing, you now have to calculate your total profit by tracking the price fluctuations of both coins, and then report that to the tax man.
This is a very simple scenario and it is already a massive pain-in-the-ass clusterfuck fast approaching practical impossibility. Now think of all the transfers, exchanges, and trades you’ve made for a zillion different crypto coins on myriad exchanges, blockchains, and platforms (just like this one right here). Starting to sound a little nuts, isn’t it, all this tracking?
In other words, for users of crypto tokens to remain “legal”,
they will be forced to keep track of every single coin they purchase, its value at the time of purchase, and any and all price losses or gains resultant from exchange for other tokens, transfers, trades, blockchain forks, network fees, etc, along the way. Then at the time of conversion to Japanese yen for purchase, the original value of the coin must be measured against the profit and taxed.
Now if you’re not both laughing and crying here a little bit, I would encourage you to read the above paragraph one more time. I laugh because I am thinking about the fantastically impossible task this poses for the state, in that executing a successful tracking program for every crypto coin address used on every exchange, platform, and in every single trade, private or otherwise, AND linking said addresses to individual users (most wallets and exchanges use fresh addresses for each transaction), is akin to an attempt to keep every single raindrop from hitting the ground in a typhoon-scale, massive downpour.
I’m looking forward to see how individuals here in Japan approach this problem. Sometimes challenging times bring out brilliantly creative solutions.
Check out Jon’s great article HERE for more information.
If you read Japanese or don’t mind using a translator, you can read the legislation for yourself HERE.
Please let me know what you think, in the comments.
~KafkA
Graham Smith is a Voluntaryist activist, creator, and peaceful parent residing in Niigata City, Japan. Graham runs the "Voluntary Japan" online initiative with a presence here on Steem, as well as Facebook and Twitter. (Hit me up so I can stop talking about myself in the third person!)
Of course, if the sweater store accepts crypto, then the taxman has a whole other problem.
Actually, though, @mattclarke, it looks like even if the sweater shop accepted Bitcoin, the tax would still be applicable and I would be expected to report it, rereading Jon’s article and the legislation. That said...how? How in the hell...
Exactly. Its taking the grey market online.
I call out a plumber and pay him cash, not asking for a receipt; he's going to give me a cheaper price, and we both know why.
That, but over the net.
They will make it work. And to quickly change us to crypto, they pretend to not like it. They want that we want it and feel as rebels.
https://steemit.com/finances/@rockwellontherun/why-crypto-means-tax-and-abolishing-cash-and-what-that-means-for-us
;) ;) ;) ;) ;)
You the maaaann, @mattclarke.
@phelimint is putting together a list of online retailers which accept steem :)
Excellent.
:) is this is just for japan @kafkanarchy84
Well, the US is already applying capital gains tax to Bitcoin and one man is facing prison time for not reporting profits made from selling face to face via Localbitcoins.com. This happened in Michigan, I believe.
Stories like that are given a lot of attention in order to scare people into voluntarily submitting their info, because that's the only way it'll work. The truth is the government can't go around searching for everyone's hidden cold wallets when we lie and say our crypto got hacked and we made no gains. It's not hard to hide crypto, and to use it completely anonymously from the start so the government can't trace it to you in the first place.
thanks for information and freind
do check my post if u have lil bit time for newbies @kafkanarchy84
The finance ministers of the world will LOVE bitcoin. If you have all the broker customer data it's a dream in transparency.
bitcoin -> Monero -> back to a different bitcoin address. Transparent @rockwellontherun? ;)
Guess the tax authorities will just tell us: «Here is the money you invested as a fact via your broker account. Now you have to show us and prove.» Do you think this is unlikely, Alan?
I would advise NOT using a brokerage account for a start! If you do that, then you could always claim: a). You haven't realised a capital gain & therefore no tax id due, b). You've lost it... i.e sent it to the wrong account.
Although possibly inappropriate, I ended up laughing at the enormity of the above proposition from a purely functional perspective. I'm visualizing this veritable army of millions of civil servants in penguin suits who's only task in life is to track every move of every conceivable coin in an eternally changing market... keeping track of all that, and auditing all those transactions will consume more electricity than used for all the Bitcoin ever mined!
I wonder what's going to happen when they have to move from "looks good, on paper" to "how do we actually IMPLEMENT this?"
The only thing they can possibly do is just start lying about people's financial records, claiming they have "proof" of "tax evasion," clamp down on vendors accepting crypto, and start jailing this or that mark to be set up as an example (much like the guy in Michigan recently busted for making BTC profits on Localbitcoins.com) and given extremely harsh sentences.
This will instill fear in a lot of folks.
Like you said though. The task they set out to accomplish is literally impossible. That is, if enough folks are bold and creative enough to keep living free and utilizing free markets.
It would be such a mess... several countries around the world have already set themselves up to be "Crypto friendly" (Switzerland, Greece and Turkey come to mind), so there will always be available loopholes for those who decide to use them. Of course, then we could argue that governments would only aim to clamp down on "most" users (whatever that means) and let the smartest ones slip through the cracks.
It seems to me that the time for "absolute NO" has come and gone, and at this point the best governments can realistically hope for is playing the game in a "reasonable" fashion, in a similar way to how self-employment income is approached. Yeah, you owe it... and it's up to you to report it... and if you're driving a Lambo on claimed income of $18K a year, we're gonna audit the frak out of you.
I'm inclined to agree, @denmarkguy. I'm interested in what you said about Switzerland, Greece, and Turkey, though. What do you mean by "Crypto friendly"? I'll have to check out those countries.
Sons of bitches!
They're probably doing it at the behest of their controllers in DC & City of London. It's standard operating procedure for a dying system of control to rob their citizens and the citizens of the vassal states.
Fuck legal, they ain't getting a penny off me if they try that shit here.
Blood is boiling dude.
I'm very sorry for the Japanese government.
In my opinion there are few real possibilities for that to happen. The amount of crypto currencies and transactions made, makes tracking them all practically impossible. That without counting direct transactions between users and transactions of crypto currencies directly for services or material goods.
This news seems to me an attempt to stop the increase in the market value of the crypto currencies, rather than a real possibility of taxing the entire crypto market.
This is an excellent comment and you may be dead on with this observation here.
Hehehe, free thinking not allowed?
Politicians should go back to math class before launching proclamations like that. For me it sounds as absurd as telling the population that you can stop a volcanic eruption or an earthquake.
Looks like Japan was way ahead of everyone here.
When many governments were thinking of banning or restricting cryptos, Japan realized it was smarter to accept it, then wait for the critical mass to develop to some point of no return & then enforce their dreaded Taxmen.
Governments like these are more formidable opponents to anarcho-capitalists & crypto-anarchists.
Sadly I have to agree with you. An astute observation, indeed.
Classic example of a situation when people want to regulate something but don't know crap about the topic. Also, is there any info on the tax %?
Some were fearing as high as 50% due to the fact that crypto gains were being defined as “miscellaneous income.” I need to look more deeply into that. The linked articles go into it a bit.
Jesus... Crypto wouldn't be that much fun in an instant.
Geez😵😵😵😵
I have to admit I've been waiting for the governments of the world to kick it into high-stupidity-gear, crypto-wise. The faster they start with policies and regulations based on their insane belief in their own omnipotence, the faster they will show their own IMPOTENCE and their whole house of cards will fall down.
I'm looking forward to it - 2018 is probably THE YEAR of governments thinking they can handle crypto. LOL.
I’m right with you, @anarchospace. Great comment.
This could strangely also be a very positive signal. This is basically the government saying:
We expect huge gains in crypto investments (so therefore we want to tax it).
Keep in mind tax will only apply to gains, so it confirms that in the near future they expect gains in the domain. When a government makes a statement like this, it's likely to be picked up by large investors (who probably already have great experience with minimalizing their tax rates).
I wish the Japanese government good luck with applying their new rules, it seems like a near impossible thing to do btw. How will they treat anonymous accounts on decentralized exchanges for example..? They will try to apply a centralized governing system to decentralized systems, that's probably not going to fly well.
As crypto is now an officially recognized currency here, I’m not so sure about that...
Well, that's what I understood from the article you mention in your blog:
https://www.bitsonline.com/japan-tax-digital-asset-gains/
(I actually read that before commenting, I should have known to just simply stay on steem)
Yeah, looks like you are right.
I am just wondering about folks who work for BTC startups and choose to recieve their salary in BTC... Can’t imagine it wouldn’t be taxed. More questions.
I also answered too hastily and didn’t emphasize how much I am in agreeance with you about the near impossibility of accurate tracking.
Things like this will only entice the need/use for decentralized exchanges even more. So in some way this is positive news xD
Ok I get the fomula: no tax no state. I myself am no anarchist, think I maybe a classical liberal or anarcho-syndicalist. I believe in some sort of state or political power. However, as stated in the comments regulators know Jack #### about cryptos. Then why not let the crypto space self-regulate? I mean, I don't think that the free market can regulate the free market, so that it will stay free. But maybe a decentralized committee can debate the issues of taxation. Like the community in Steemit discusses software implementations.
I pretty much agree with everything you’ve said here. The problem is you’re asking an irrational and inherently violent entity (the state) to behave rationally and not to violate people.
right but they can only be this violent and irrational when they have central control over something. when something is decentralized in nature it forces people to work as equals.
Because money.