Japan has officially elimainated consumption tax on Bitcoin has as of July 1, 2017 in Japan. As a result, people are expecting the rise of Bitcoin trading activities due to this new reform bill. Deloitte has expressed the following in the report: “Japan: Inbound tax alert, 2017 tax reform proposals”:
“The supply of virtual currency will be exempt from Japanese Consumption Tax (“JCT”). Currently, virtual currencies such as Bitcoin do not fall under the category of exempt sales, and as a result, the sale of virtual currencies in Japan have been treated as taxable for JCT purposes. Following the enactment of the amended Fund Settlement Law in May 2016, which newly defined “virtual currency” as a means of settlement, the sale of virtual currency as defined under the new Fund Settlement Law will be exempt from JCT. This change will apply to sales/purchase transactions performed in Japan on or after 1 July 2017.”
The Japanese National Diet approved the 2017 tax reform proposals including the Bitcoin consumption tax bill. The bill officially became effective on July 1, 2017. When the government started applying this bill, there was a hope of increasing Bitcoin and cryptocurrency trading activities in the Japanese market.
On July 1, 2017, the date when Japanese Government passed tax-free bill for Bitcoin, the Bitcoin price increased from $2450 to $2570. This could have been a coincidence, however as we could not assess the momentum of Bitcoin based purely on the Japanese market. Currently, the Japanese market occupies 16.2 percent of the global Bitcoin exchange market. The positive signs of Bitcoin trading activities in Japan has led to a better movement around Asia, which seizes more than 65 percent of the global Bitcoin exchange.
The exclusion of tax on the sale of Bitcoin is very significant for the ecosystem of Bitcoin traders in Japan. Consequently more and more Japanese companies and retailers are accepting Bitcoin as a currency for their payment method.
Young, J. (2017). It’s official: Japan has eliminated tax on Bitcoin, rise in trading expected. The Cointelegraph. Retrieved July 4, 2017 from https://cointelegraph.com/news/its-official-japan-has-eliminated-tax-on-bitcoin-rise-in-trading-expected
(2017). Japan: Inbound tax alert, 2017 tax reform proposals. Retrieved July 4th, 2017 from https://www2.deloitte.com/content/dam/Deloitte/jp/Documents/tax/bt/jp-bt-japan-inbound-tax-alert-dec-2016-no19.pdf
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