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Japanese tax authorities are planning to take action against entities underreporting their cryptocurrency-based profits, according to local news outlet Asahi Shimbun.
The move will find some 50 traders and 30 firms in Japan that failed to declare cryptocurrency income worth more than 10 billion yen ($92.4 million) over the last few years until March, the report revealed citing sources.
The high tax rate of crypto earnings might be the reason for undeclared taxes. In Japan, cryptocurrencies, which are categorized as “miscellaneous income,” are taxed at up to 55%, which is way higher than the tax rate of trading stocks at only 20%.
The report also found that an investigative team at the Tokyo Regional Taxation Bureau asked cryptocurrency exchange operators to submit their clients’ transactions data in 2018, allowing it to create a list of accounts that made substantial earnings.
This information, together with the data from other regional tax bureaus in Japan, suggested that holders with about 7 billion yen ($64.7 million) of such income had attempted to cover it for tax purposes.
Authorities are planning to file a tax evasion complaint against traders with large gains or holders who used illegal methods to do it.
Currently, platform operators can offer a high level of anonymity for virtual currency traders. But Japan’s new law, which will take effect in January, will allow tax officials to order the release of information of clients under certain conditions. Penalties will be stipulated for non-compliant operators.
Meanwhile, Nikkei Asian Review reported Japan will deploy around 200 specialists to detect undeclared cryptocurrency trade-related incomes, as well as earnings from monetized videos and other new economy staples. The authorities, which will be assigned to 12 offices across the country next month, will help in tax evasion investigations.
Amid the crackdown, Mark Karpeles, the former CEO of now-defunct Bitcoin exchange Mt. Gox, will serve as the chief technology officer for his new Ethereum-based blockchain venture firm called Tristan Technologies Co. The new startup aims to create a secure and faster operating system compared with other platforms currently in use.
