Japan Ends Consumption Tax On Cryptocurrencies
As of July 1, 2017, Japanese cryptocurrency holders are now exempt from the eight percent Japanese Consumption Tax (JCT). The exemption is the result of 2017 tax reform revisions which were proposed by the Japanese Liberal Democratic Party and Komeito Party in December. As per the KPMG Japan Tax Newsletter from December 14, 2016:
“It is proposed that transfers of virtual currencies will be treated as non-taxable transactions, since virtual currencies were officially defined as a means of payment by virtue of the amendment to the Payment Services Act which was passed in May this year.” The document continues, “This amendment will be applied to transactions carried out on or after 1 July 2017.”
The proposed amendment was passed by the Japanese National Diet on March 27, 2017. Days later, Japan’s Financial Services Agency authorized cryptocurrencies to be used as a form of payment. As a result, the country has experienced increased cryptocurrency related activity. Further, the country has also taken steps to capitalize upon this action by securing likeminded partnerships with progressive countries like Australia.
The government of Australia also revealed in its 2018 Budget that cryptocurrencies will be exempt from double Goods and Services taxation after July 1, 2017.
On June 23, both countries announced the co-operative framework that would create opportunities and facilitate innovation within the financial service industries of both jurisdictions. The partnership encourages both parties to share with each other vital information on “Innovation Functions” like cryptocurrencies. As per The Financial Services Agency of Japan:
“The Authorities share a mutual desire to promote innovation in financial services in their respective markets. Both Authorities have established Innovation Functions in order to do so. The Authorities believe that through co-operation with each other, they will be able to further the promotion of innovation in their respective markets.”