Japan to introduce new reporting system to prevent crypto tax evasion

It’s no secret that Japanese authorities are looking to take control over tax money it feels is lost in the crypto space. The country is behind an effort being developed by the G20 to implement a global crypto tax strategy that could see governments receive millions of dollars in payments. Back home in Japan, regulators are now looking to introduce a new system that will report significant profits from crypto-based transactions, helping the country recover even more funds.

According to the Japanese media outlet Mainichi Shimbun, the new system to be implemented will give the National Tax Agency (NTA) the ability to gather data from transaction intermediaries, which include crypto exchanges. The NTA will have the authority to request information – such as names, addresses and personal ID numbers – on customers that it suspects of tax evasion. If everything goes according to plan, the system will be developed next year, with an anticipated implementation for the new fiscal year beginning in April 2020.

Not all individuals would be targeted by the new system. The media outlet quotes several sources who said that only those who earn over 10 million yen ($88,700) through crypto transactions would be held accountable.

Currently, crypto exchanges and other companies that are deemed intermediaries only give up data voluntarily. They have the legal ability to refuse to hand over information, but this could change with the new legislation. The exchanges could be forced to adhere to the requests, but would still maintain the right to appeal any request it feels is unwarranted.

The impact won’t be felt widespread, at least not initially. According to a recent survey conducted by the NTA, only just over 300 people indicated that they earned more than 100 million yen through crypto last year. Given the current market slide, the number has probably dropped significantly.

Japan is also ready to come down hard on initial coin offerings (ICO). The Japanese Financial Services Authority (FSA) announced this week that it would introduce stricter regulations on the offering in order to protect investors from fraud. Going forward, any entity wishing to launch an ICO would have to first register with the FSA.

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Ohio now accepting tax payments in crypto

Ohio became the first state in the U.S. to allow cryptocurrencies to be used by business entities for paying a variety of taxes.

The state, upon the initiative of the office of Treasurer Josh Mandel, launched the website ohiocrypto.com, as first reported by The Wall Street Journal.

According to the website, the enabling of cryptocurrency-denominated tax payments is part of efforts to make Ohio a leader in blockchain technology among U.S. states. “Treasurer Mandel believes in leveraging cutting-edge technology to provide Ohioans more options and ease while interfacing with state government,” the website reads.

Even entities without prior registration can set up their account in order to pay 23 different taxes, such as for tobacco sales, public utilities, general sales, motor vehicles fuel, commercial activity, and 911 Wireless. Currently, individual entities are not eligible to pay income taxes or other personal taxes using cryptocurrency.

Payments, in BTC, are to be processed by BitPay, so that none of the actual cryptocurrency goes to the Treasurer’s Office. The paid amounts are converted to U.S. dollars before being deposited into a state account.Exchange rates are set for 15 minutes from when payment is begun, taking into account volatility of prices, wherein BitPay assumes any losses related to the trade.

Transaction fees are set at 0% of amounts paid for the first three months upon launch of the website, after which a 1% rate will be charged. Even at 1%, the Treasurer’s Office said, the fee was considerably lower than the 2.5% charged when using a credit card to pay on the Ohio Business Gateway.

Cryptocurrencies seem to be especially appreciated in Ohio. Just this month, Rep. Warren Davidson announced the filing of a bill that would classify initial coin offerings (ICOs) as a product distinct from that of a ‘security,’ so as to reduce the Securities Exchange Commission’s (SEC’s) authority over such offerings. The bill seeks to be applicable at both a federal and state level.

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To prevent tax fraud, Spain will keep an eye on 15,000 crypto investors

The Spanish Ministry of Finance is to inspect some 15,000 individuals who have engaged in cryptocurrency transactions over the last year, Spanish-language news outlet El Pais reported.

The announcement follows on from the introduction of compulsory reporting of cryptocurrency transactions for Spanish taxpayers, and will investigate whether there is any basis for prosecution over tax fraud from those who might have profited from their crypto investments over the period.

The policy is part of a wider crackdown on crypto investors in Spain, with the government keen to recover as much tax liability as possible from those dealing in digital assets.

As part of its annual tax control plan, the Agencia Estatal de Administración Tributaria (AEAT), said it would be monitoring “the fiscal incidence of these new technologies, such as blockchain and, especially, cryptocurrencies,” with a view to preventing tax evasion and fraud.

According to AEAT, “The use of cryptocurrencies, such as [BTC], as payment means, is one of the most demanding challenges today. In order to face this threat, the use by the tax agency’s research units of the new information collection and analysis technologies in all types of networks will be enhanced.”

The move comes after the country’s National Fraud Investigation Office opened investigations into banks, financial companies and other organizations engaged in crypto transactions, before settling on a group of around 15,000 that have been earmarked for further inspection.

Should the investigations prove fruitful for the tax authorities, there is the suggestion that the scope of investigations could be broadened in future, potentially affecting a larger number of individuals with cryptocurrency holdings.

The Spanish authorities introduced measures back in October, requiring investors to declare the extent of their cryptocurrency holdings on an annual basis, in the form of a return to the tax office.

The AEAT has said it will now monitor those that are known to have been involved in cryptocurrency dealings, with a focus on those that have failed to fully declare capital gains or those who may have been involved in money laundering.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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French lawmakers pushing for lower crypto tax

The Finance commission of France’s lower house of Parliament is endorsing a proposal to lower taxes on sales from cryptocurrencies, according to a Reuters report.

When passed, the measure, adopted as an amendment to the country’s 2019 budget bill, will reduce the current tax rate on cryptocurrencies by 6.2%, from the current rate of 36.2% to a flat 30%.

The capital gains tax rate on digital assets had previously been at 45%, with tax officials putting them in the same classification as commercial and industrial property in 2014, but this was lowered last April to 19%. On top of the capital gains tax, however, is a 17.2% “social contributions” levy. Gains from cryptocurrency mining continue to be taxed at 45%, plus social contributions.

The proposed tax cut, along with the 2019 budget, is expected to take effect in January next year.

Other countries, in Europe and elsewhere, have sought tax reforms in connection with cryptocurrencies, if not to lower rates, then to at least provide for greater regulatory clarity. In Poland, a bill is now pending that would classify fiat proceeds from the sale of cryptocurrencies as individual or corporate income, while subjecting sales from cryptocurrency-related equipment and other property to capital gains tax. In the bill, cryptocurrency-to-cryptocurrency transactions are not taxed.

In Australia, the Australian Tax Office (ATO) has maintained a position that cryptocurrencies are assets subject to capital gains tax, like sales from real estate.

In India, an 18% tax on cryptocurrency sales has reportedly been studied by the Central Board of Indirect Taxes and Customs.

In South Korea, cryptocurrency exchanges have been subject to taxes similar to small and medium enterprises (SMEs), who receive 50%-100% tax cuts for their first five years, and are taxed from 5%-30% beyond that. However, starting around the end of the year, these companies will no longer enjoy such a classification, and taxes are expected to increase.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Thai revenue department turns to blockchain for tackling tax avoidance

The revenue department in Thailand has become the latest government body to turn to blockchain technology, after it announced plans for tackling tax avoidance and investigating fraud.

As reported in the Bangkok Post, the department’s director general Ekniti Nitithanprapas said the revenue would combine blockchain with machine learning technology, to improve both the efficiency and accuracy of probes into suspicious tax affairs.

Crucially, the technology will automatically reconcile tax information and identify irregularities, based on common tax avoidance methods. The system will also allow for quicker tax refunds, as well as providing greater transparency throughout the tax system.

The director general has previously highlighted blockchain technology as one of several key research focuses for the department, along with big data and a wholly digital tax collection system.

While these remain priorities for the revenue department, the specific disclosures around the tax platform indicate this is likely to be high on the government’s list.

Blockchain technologies are becoming increasingly mainstream in government agencies and departments, as well as organisations of all sizes in the private sector.

The tax avoidance use case described by the Thai authorities is one of countless possible ways blockchain and distributed ledger technology can be deployed.

The revenue department announcement comes just weeks after the Ministry of Commerce announced plans for its own blockchain applications, scheduled across the likes of trade finance, agriculture and copyright.

The moves coincide with an increasing push from big business in Thailand towards exploring blockchain tech. In October, Siam Commercial Bank teamed up with Accenture to deliver a blockchain platform for simplifying supply chains.

With significant efficiency gains on offer through the new system for the tax authorities, it looks likely that these plans will come to fruition—in a move that could serve as a case study for government agencies elsewhere in future.

As one of the stated main priorities of Thai authorities, it remains to be seen how quickly the new system can be rolled out—and whether it offers the benefits the government expects.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Spain passes new crypto asset declaration law for citizens

A new law approved by Spain’s Council of Ministers will oblige private citizens to declare their cryptocurrency holdings, in a landmark development for crypto regulation.

As part of new anti-fraud measures presented by Finance Minister María Jesús Montero, the bill requires an annual disclosure of crypto holdings, as well as any offshore fiat holdings, to tax authorities, Spanish news outlet ABC.es reported.

The law aims to claw back an additional €850 million ($966.43 million) in tax, at a time of severe budgetary pressures in Spain. With youth unemployment as high as 33.8%, the Spanish government has been investigating existing loopholes to deliver the extra revenue it needs.

Previously, cryptocurrency activity has been largely unregulated in Spain, with the suggestion that there could be significant private holdings of crypto presently undisclosed to tax authorities.

With the need for revenue more pressing than ever, the Spanish model could eventually inspire similar moves from other governments.

Earlier this year, the United Kingdom, United States, Australia, Canada and the Netherlands joined forces under the banner of the J5 Joint Chiefs of Global Tax Enforcement partnership—an transnational body for tackling tax evasion, which could ultimately adopt similar proposals.

The bill also institutes a 0.2% transaction tax on listed shares worth over €1 billion ($1.14 billion), with some commentators speculating this could ultimately extend to cryptocurrency transactions.

“Tobin Tax” provisions within the law seek to apply taxes on the difference between opening and closing positions on the day, in what could potentially deal a significant blow to crypto traders deploying intraday strategies.

According to press reports, the Spanish government is also stepping up its enforcement efforts, with an additional 200 officials assigned to a new taskforce. As well as expanding the list of countries deemed to be tax havens, the bill will also introduce new infrastructure for instant VAT reporting.

The news confirms the increasing interest paid by governments and tax authorities to the crypto holdings of their private citizens. As regulatory oversight steps up in cryptocurrency markets, and now on cryptocurrency investors, these developments leave investors open to potentially significant liabilities to domestic tax authorities.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Draft bill seeks ‘tax holiday’ for crypto companies in Ukraine

A bill proposed by lawmakers in Ukraine could see the country’s fledgling cryptocurrency sector benefit from a “tax holiday,” as part of a package of measures designed to foster the development of the sector there.

Filed before the Verkhovna Rada, Ukraine’s parliament, the tax exemptions proposed by the bill would potentially benefit the sector until the end of 2029, in what would be a significant development for the country’s crypto entrepreneurs and related entities.

Lawmaker Yuri Derevyanko, of the Movement of New Forces party, has guided Bill 9083-1 through several parliamentary hurdles already, including passing committees responsible for budgetary police, EU integration, customs and financial industry policies.

If passed into law, the bill would change the country’s tax code, providing tax breaks on all income earned from cryptocurrency business, including gains from crypto transactions.

The measures would apply to private individuals as well as businesses, in addition to exempting the import and sale of mining equipment from applicable VAT.

The bill also goes on to define cryptocurrencies in Ukraine’s statute books for the first time, qualified as intangible digital assets with ownership recorded in a distributed ledger. Mining is described as a “data processing activity,” for which digital assets are paid as a reward.

Derevyanko said introducing a 0% tax rate for the crypto sector would be instrumental in its development within Ukraine. He told local media, “I think that it is necessary to introduce a 10-year tax moratorium in the crypto space. We must streamline and legalize this huge sector, which will be the engine of the new economy.”

The bill becomes the second before Ukraine’s parliament, following similar proposals from the president’s Solidarity party. Under these proposals, a tax rate of 5% would be introduced for the sector up to 2024, falling short of the measures proposed by Derevyanko.

For the most part, Ukraine’s crypto sector is currently unregulated, with previous bills seeking to establish regulations tied up in the parliamentary system, without notable progress being made.

If adopted, the latest proposals would be the most significant attempt to date to write cryptocurrency into domestic law, as well as establishing more favourable conditions for crypto businesses to set up in Ukraine.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Spain introduces law to force investors to reveal crypto holdings

Spanish cryptocurrency enthusiasts just received a bit of news that won’t make most of them happy. A local news outlet in the country, ABC, reported last Friday that the government has signed off on a draft bill that would force crypto investors to reveal their holdings in order to properly assess taxes on the digital assets.

The new rules were announced during a press conference held by Spain’s finance minister, María Jesús Montero. The change in legislation will force all Spaniards to declare the assets whether they live in the country or overseas. Montero explained that, with the new legislation, the government would be able to identify crypto holders, as well as “the balances contributed by these virtual currencies.”

Spain is working on increasing regulation over the crypto industry. This year alone, it has sent requests to more than 60 businesses, asking them to provide identification of their users. Should the draft bill be accepted as law, crypto holdings will be required for inclusion into the 720 form, Spain’s tax reporting structure. Those that don’t properly report their assets through the tax filing can be fined as much as $5,745 for each discrepancy.

In addition, according to ABC, the draft bill “will include the prohibition by law of new tax amnesties . This was an old announcement by the former minister, Cristóbal Montoro, and results in a measure of little influence: tax amnesties may continue to be approved, although this will require reforming the current anti-fraud law, which introduces a new obstacle, but little else.”

The European Union (EU) currently doesn’t have standard regulations for cryptocurrencies, particularly when it comes to cryptocurrency. Some countries, such as Poland, have reversed course on previous legislative efforts to address taxes. Others, including Malta and Portugal, have established policies in place to ensure the governments can collect taxes on crypto assets.

Despite the lack of regulations, the EU is moving toward recognizing crypto as a legitimate currency. An announcement released recently by EI officials stated, “A digital representation of value, not issued by a central bank, credit institution or e-money institution, which in some circumstances can be used as an alternative to money.”

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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Japan looking at ways to simplify crypto tax filings: report

The crypto industry has gradually grown into a multi-billion dollar industry, and countries like Japan are beginning to amend their tax-related regulations to include the cryptocurrency industry.

This week, reports surfaced that Japan’s Tax Commission is considering how to simplify the current tax filing system to include cryptocurrency. Sankei News reported that the Japanese taxation policy committee held a general assembly last Oct. 17 to discuss the idea of creating a system that will enable cryptocurrency investors to accurately calculate their profits on the sales of their digital assets against both fiat currencies and other cryptocurrencies.

Calculating cryptocurrency profit is currently a cumbersome task for taxpayers due to the differences in price, depending on the platform. Also, the report noted that taxpayers may find it difficult to submit a proper tax filing as the method of storing historical transaction data is not standardised. The president of the committee, Minoru Nakazato explained the need for a simplified system, saying: “Since it is necessary to take into consideration frameworks other than the taxation system and business practices, we will hold a small meeting of experts to deepen the discussion while listening to outside opinions.”

Currently, crypto investors in Japan have to declare the profits from the sale of their cryptocurrencies, which fall under “miscellaneous income” in filings to the National Tax Agency. A tax return of 15 to 55 percent is required if the gain is above JPY200,000 (about $1,800) yen per year. According to Sankei, “The environment should be adjusted so that tax returns can be simplified.”

Earlier in June, Japan lawmakers had raised the issue of changing cryptocurrency taxation from its current classification to that of “separate declared taxation”; however at that time, the suggestion was pushed back by Japan’s deputy prime minister. The deputy prime minister believed that the general public will find it difficult in understanding the changes. He also claimed that Japanese citizens might not come to terms with a change in tax classification due to the “international nature” of cryptocurrency.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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US lawmakers want IRS to clarify guidelines on crypto tax

Five legislators in the United States have sent an open letter to the Internal Revenue Service (IRS), urging the tax agency to update its cryptocurrency tax guidelines.

The letter, sent last Wednesday, was the second of its kind from the House of Representatives’ Committee on Ways and Means. The first letter, sent on May 17, 2017, asked the IRS for its comprehensive strategy on digital currencies.

Now, representatives including David Schweikert, Darin LaHood, Kevin Brady, Lynn Jenking, and Brad Wenstrup are asking IRS Acting Commissioner David Kautter “to issue updated guidance, providing additional clarity for taxpayers seeking to better understand and comply with their tax obligations when using virtual currencies.”

In their latest letter, the bureaucrats stated that ever since the introduction of cryptocurrencies in the market, the IRS has struggled with how best to treat cryptocurrencies for tax purposes.

They believe the IRS has made “enforcement a priority,” making “robust enforcement actions on a number of fronts, instead of making the public understand everything they need to know about cryptocurrency taxation. In March, the IRS reminded the public to fill their returns or to face penalties or criminal responsibilities. The letter seems to suggest that it is improper to impose enforce penalties and criminal charges against individuals who do not understand what they are required to do. The lawmakers want the agency to take the responsibility and ensure they do not punish the public needlessly for owning cryptocurrencies.

“While the Committee appreciates the IRS’s need to undertake enforcement actions to ensure that taxpayers generally meet their tax obligations, in this case, we are concerned that the IRS is seeking to enforce guidance that does not adequately advise taxpayers of their tax obligations when using virtual cunencies,” the letter noted. “Furthermore, while the issues surrounding virtual currencies are complicated and ever evolving, a key component of the IRS’s duties as the nation’s tax administrator is to assist taxpayers in understanding what their tax obligations are and how they may best meet them.”

IRS first imposed taxation on cryptocurrencies in 2014. During this time, only a few cryptocurrencies were being used to make a transaction. The legislators believe it is high time the IRS makes changes to adapt to the changes in the market.

Note: Tokens on the Bitcoin Core (segwit) Chain are Referred to as BTC coins. Bitcoin Cash (BCH) is today the only Bitcoin implementation that follows Satoshi Nakamoto’s original whitepaper for Peer to Peer Electronic Cash. Bitcoin BCH is the only major public blockchain that maintains the original vision for Bitcoin as fast, frictionless, electronic cash.

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