Cryptocurrency investors in Japan may face up to 55% of capital gain tax, Bloomberg reports.
While winnings on stocks and foreign currencies are taxed around 20 percent, Japan’s levy on profits from virtual money runs from 15 percent to 55 percent, the top amount being 40 million yen ($365,000).
Japan ruled last year that that capital gains on these transactions are a form of "miscellaneous income," investors are now required to declare their profits in annual tax filings due Feb. 16-March 15.
Some cryptocurrency-rich investors have already left Japan for countries, such as Singapore, where long-term investments in virtual money are not taxed, said Kengo Maekawa, chief executive of Shiodome Partners Tax Corp.
The revenue-raising potential for the Japanese government could be significant. In recent months about 40 percent of all trading in Bitcoin (EXANTE: Bitcoin) has been against the yen.
The Japanese tax agency is now creating a database on cryptocurrency investors and teams based in Tokyo and Osaka are maintaining a close watch electronic trading.
The U.S. is another country taxing digital money. The Internal Revenue Service in 2014 declared cryptocurrencies to be property, like gold or real estate, making long-term capital gains on them subject to tax, though at rates lower than Japan.