In a dynamic turn of events, Japan witnessed a notable decrease in the average value of undeclared cryptocurrency holdings, coupled with a significant surge in tax evasion cases involving digital assets in the year 2022. The National Tax Agency (NTA) revealed compelling statistics that shed light on the evolving landscape of crypto taxation in the country.
Undeclared crypto holdings show a 19% drop
The average value of undeclared cryptocurrency holdings in Japan experienced a sharp decline of 19% in 2022, contrasting the figures from the previous year. In 2021, the average undisclosed crypto value stood at 36,590,000 Japanese yen (approximately $245,000), whereas it receded to 30,770,000 yen ($206,000) in 2022. This unexpected downturn in undeclared crypto values has raised eyebrows and triggered discussions among tax authorities and market observers.
Despite the decrease in average undeclared crypto values, Japan faced a 35% rise in tax evasion cases related to cryptocurrency assets during the same period. The NTA initiated a total of 615 investigations into citizens’ crypto holdings based on their tax declarations for the fiscal year 2022, marking a substantial increase from the 444 cases initiated in 2021. Out of these investigations, 548 cases revealed instances of tax violations, signifying a 35% surge compared to the 405 crypto tax evasion cases reported in the preceding year.
In August, Japanese regulators, including the NTA and the Financial Services Agency (FSA), delivered a pivotal announcement. They confirmed that citizens would be exempt from a capital gains tax on unrealized gains in cryptocurrency, providing relief to holders who did not engage in trade operations during the fiscal year. This exemption shields individuals from paying approximately 35% of taxes on crypto assets stored without active trading.
Global commitment to transparency
In a move emphasizing international cooperation, Japan recently joined a coalition of nearly 50 nations committed to swiftly implementing the Crypto-Asset Reporting Framework. This framework represents a new global standard for the automatic exchange of information between tax authorities.
By incorporating this framework into their domestic legal systems, participating countries, including Japan, aim to enhance transparency and facilitate the tracking of cryptocurrency transactions for tax purposes.