Japan Bitcoin Tax Exemption Law Goes into Effect Today
On Saturday, July 1, the revised consumption tax law went into effect throughout Japan, and bitcoin transactions no longer incur consumption tax of 8%. On the same day, Australia also ended bitcoin double taxation. In an interview Yuzo Kano, CEO of the largest Japanese bitcoin exchange by volume Bitflyer, to find out the real implications of this change in Japan.
Bitcoin Exempt from Consumption Tax in Japan
The Japanese government has approved the exemption of digital currencies, such as bitcoin, from consumption tax. The “Cabinet Order for Partial Revision of the Order for Enforcement of the Consumption Tax Act” went into effect on July 1. Bitflyer explained:
Effective July 1, 2017, virtual currency transactions [purchases / sales] will become exempt from consumption tax.
The Japanese consumption tax rate is currently 8%, which was scheduled to increase in April of this year. However, on June 1, 2016, Prime Minister Shinzo Abe announced that “the rise in the consumption tax to 10% and the introduction of the reduced tax rate would be postponed until October 2019,” Japan External Trade Organization detailed.
While the revised law abolishes consumption tax on digital currencies, there remain other taxes such as personal income tax, capital gains tax, or corporate income tax that they are subject to. “If income obtained from virtual currency is earned at the individual level, this is (per Japanese taxation standards) treated as miscellaneous income and subject to tax on aggregate income,” Bitflyer detailed. “For corporations, it is treated as operating revenue.”
The Wider Implications of Removing Consumption Tax
Bitflyer’s CEO, Yuzo Kano, told Bitcoin.com on Friday that having no consumption tax on bitcoin in Japan will lead to three significant considerations.
The first is that “users will no longer need to buy more expensive bitcoins, so Japanese users can send BTC abroad without [paying] a price gap,” he conveyed.
In addition, Kano explained that this will have a “psychologically positive” effect on the Japanese people since the cryptocurrency will be seen more like a “real currency”. Nonetheless, he reiterated how bitcoin is a legal method of payment under the Japanese law and not a currency.
The third and the most important consideration, Kano believes, is that:
Bitcoin exchanges will be able to buy bitcoins abroad. This is very important since resident exchanges have been taxed for buying virtual currencies (BTC and altcoins) from non-residents. Japan will finally have access to global markets.
What do you think will be the real effects of removing consumption tax on bitcoin? Let us know in the comments section below.