Japan’s tax authorities have reported a significant decline in the average value of undeclared income in the cryptocurrency sector, with a notable 19% decrease in 2022.
The Japanese National Tax Agency (NTA) unveiled its annual summary of tax investigations on November 24, shedding light on the state of crypto tax evasion in the country.
In the past year, the NTA launched 615 investigations into individuals’ crypto holdings based on their tax declarations for 2022.
This marked a notable increase from the 444 investigations conducted in 2021. Out of these investigations, the agency discovered tax violations in 548 cases, representing a substantial 35% rise compared to the 405 crypto tax evasion cases recorded in the previous year.
One of the most striking findings is the drop in the average value of undeclared crypto holdings.
In 2021, the average value stood at 36,590,000 Japanese yen, equivalent to approximately $245,000.
However, in 2022, this figure decreased to 30,770,000 yen, which amounts to around $206,000.
This shift in crypto tax enforcement comes after Japanese regulators, including the NTA and the Financial Services Agency (FSA), made an important announcement in August.
They confirmed that citizens would not be subject to capital gains tax on unrealized gains in cryptocurrencies, effectively exempting them from paying roughly 35% of taxes on crypto assets held without trading activities during the fiscal year.
Furthermore, Japan has recently joined a growing list of nearly 50 nations that have committed to swiftly implementing the Crypto-Asset Reporting Framework.
This international standard aims to facilitate the automatic exchange of information between tax authorities regarding cryptocurrency assets, enhancing transparency and compliance in the rapidly evolving crypto space.
In conclusion, Japan’s efforts to curb crypto tax evasion have intensified, resulting in more investigations and a decline in the average value of undeclared crypto holdings.
With the country’s commitment to international standards for reporting crypto assets, it appears that regulatory scrutiny in the cryptocurrency sector will remain a top priority for Japanese authorities in the coming years.
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