Japan to possibly regulate and tax Bitcoin because of MtGox

Following the collapse of once the world’s largest Bitcoin exchange MtGox, Japanese officials are working on ways to levy taxes

Following the collapse of once the world’s largest Bitcoin exchange MtGox, Japanese officials are working on ways to levy taxes on Bitcoin.

According to Japanese newspaper Yomiuri Shimbun, Japan’s ministry of finance and Japan’s national tax agency are looking into ways to govern virtual and digital currencies. Following their research, the Japanese government believes purchases made with the cryptocurrency are subject to corporate and consumption taxes.

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Yomiuri Shimbun also stated, as Bitcoin is not a recognized currency in Japan, the idea of it being used in exchange for services and goods means it cannot be taxed as if the transaction was placed in the local Yen. However, given Bitcoin’s anonymous qualities, tracing those who used the digital currency as tender is extremely difficult.

Taro Aso, Japan’s Finance Minister has confirmed that government officials are still investigating how an exchange such as MtGox could have collapsed the way it did and if any criminal activity was involved.

(We) don’t know if it was a crime or just a bankruptcy,” Aso told Reuters.

Yomiuri Shimbun did not confirm the upcoming taxes, as no officials were cited. In addition, Aso did not mention or confirm any of the newspaper’s reports. Aso did state he felt the exchange was bound to “collapse sometime”.

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“I was thinking that we might face a situation where Japan has to act, but I’d say it came earlier than I thought,” he added.

The statements made by Taro Aso shows Japan was planning on finding a way to tax and regulate Bitcoin. MtGox’s fall seems to have simply sped up the process. The question remains on how Japan plans to levy such a tax on digital currencies?

Yomiuri Shimbun’s report mentioned “corporate and consumption taxes”. If this is proven to be route the government plans to tax Bitcoin that means Japan will view Bitcoin as a commodity. Taxing it in such a manner would result in the digital currency as useless, given it would be worth less than face value after taxes.

Currently the Japanese government has not made any official statements on regulating and taxing digital currencies like Bitcoin.

 

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