Japan: Should Bitcoin Be Subject to Sales Tax?
- Mar 8, 2014 | Gail Cole
In the wake of the collapse of Mt. Cox, a Tokyo-based bitcoin exchange, the Japanese government has decided that bitcoin is not currency or a financial instrument. What the virtual currency is, according to Prime Minister Shinzo Abe’s cabinet, is taxable.
According to the Wall Street Journal, the Japanese government statement said that no Japanese laws “clearly define bitcoin” but nor do they uniformly prohibit the trading of bitcoin. It emphasized that bitcoin will not offered through banks:
“Bitcoin are neither Japanese nor foreign currencies and its trading is different from deals stated by Japan’s bank act as well as financial instruments and exchange act.”
The Financial Services Agency, the Ministry of Finance and the Bank of Japan have said they are not interested in regulating bitcoin.
Yet bitcoin transactions should be taxable, according to the government statement. And chief cabinet secretary Yoshidhide Suga says that’s as it should be: “If there are transactions and subsequent gains, it is natural … for the finance ministry to consider how it can impose taxes.”
According to the New York Times, it is not yet clear whether the purchase of bitcoin will be subject to Japan’s sales tax. Toshinori Matsuschio of the National Tax Agency thinks there’s a good chance sales of bitcoin will be taxed. However, he acknowledged that bitcoin could be singled out for an exemption from sales tax. The rate of sales tax in Japan is currently 5%, but it will jump to 8% in April of this year.
The world is still grappling with bitcoin, trying to figure out how to deal with it. The BBC reports that China has banned banks from handling bitcoin trades and Russia has declared bitcoin transactions illegal. Singapore, on the other hand, has classified it as goods rather than a currency and “imposed a tax on bitcoin trading.”