The National Diet Building, Tokyo, Japan.
In a not suprising, and yet still suddenly disturbing move, Japan has once again announced that all crypto gains will be taxed, including all transfers, trades, forks, and purchases. Mining profits will be taxed as well.
This information is not really new, per se, but the frequency of the reminders, as my friend Jon Southhurst at bitsonline has pointed out in his latest article, is telling. The state is not happy that money is being made without their hands in the pot. This comes as no surprise to those who know the score. It still sucks, though, to be reminded of this harsh reality at a time when crypto and the free market are gaining such massive acceptance and momentum.
The newest information released by the Kokuzeicho (National Tax Agency) makes it clear that all profits gained from the use of cryptocurrencies, whether by mining, exchange, acquisition of coins created by forks, or purchase of goods, will be taxed at the time of conversion to fiat.
Is your head spinning yet? It should be.
Imagine purchasing crypto token X today. It is worth 1 USD. Let’s say it goes up in value to five dollars and you then decide to purchase a bit of crypto token Y with your gains. Now crypto token Y must be thought of as a result and continuation of the now divided value of X, and any fluctuations in the value of this token Y will actually be fluctuations in the value of the now exchanged percentage of token X. Meanwhile, the rest of the original token X, not used to purchase some of token Y, must be accounted for separately. When it comes time to pool your X and Y coins together and purchase that sweet new sweater you’ve been eyeing, you now have to calculate your total profit by tracking the price fluctuations of both coins, and then report that to the tax man.
This is a very simple scenario and it is already a massive pain-in-the-ass clusterfuck fast approaching practical impossibility. Now think of all the transfers, exchanges, and trades you’ve made for a zillion different crypto coins on myriad exchanges, blockchains, and platforms (just like this one right here). Starting to sound a little nuts, isn’t it, all this tracking?
In other words, for users of crypto tokens to remain “legal”,
they will be forced to keep track of every single coin they purchase, its value at the time of purchase, and any and all price losses or gains resultant from exchange for other tokens, transfers, trades, blockchain forks, network fees, etc, along the way. Then at the time of conversion to Japanese yen for purchase, the original value of the coin must be measured against the profit and taxed.
Now if you’re not both laughing and crying here a little bit, I would encourage you to read the above paragraph one more time. I laugh because I am thinking about the fantastically impossible task this poses for the state, in that executing a successful tracking program for every crypto coin address used on every exchange, platform, and in every single trade, private or otherwise, AND linking said addresses to individual users (most wallets and exchanges use fresh addresses for each transaction), is akin to an attempt to keep every single raindrop from hitting the ground in a typhoon-scale, massive downpour.
I’m looking forward to see how individuals here in Japan approach this problem. Sometimes challenging times bring out brilliantly creative solutions.
Check out Jon’s great article HERE for more information.
If you read Japanese or don’t mind using a translator, you can read the legislation for yourself HERE.
Please let me know what you think, in the comments.
~KafkA
Graham Smith is a Voluntaryist activist, creator, and peaceful parent residing in Niigata City, Japan. Graham runs the "Voluntary Japan" online initiative with a presence here on Steem, as well as Facebook and Twitter. (Hit me up so I can stop talking about myself in the third person!)
Of course, if the sweater store accepts crypto, then the taxman has a whole other problem.
Actually, though, @mattclarke, it looks like even if the sweater shop accepted Bitcoin, the tax would still be applicable and I would be expected to report it, rereading Jon’s article and the legislation. That said...how? How in the hell...
Exactly. Its taking the grey market online.
I call out a plumber and pay him cash, not asking for a receipt; he's going to give me a cheaper price, and we both know why.
That, but over the net.
They will make it work. And to quickly change us to crypto, they pretend to not like it. They want that we want it and feel as rebels.
https://steemit.com/finances/@rockwellontherun/why-crypto-means-tax-and-abolishing-cash-and-what-that-means-for-us
;) ;) ;) ;) ;)
You the maaaann, @mattclarke.
@phelimint is putting together a list of online retailers which accept steem :)
Excellent.
:) is this is just for japan @kafkanarchy84
Well, the US is already applying capital gains tax to Bitcoin and one man is facing prison time for not reporting profits made from selling face to face via Localbitcoins.com. This happened in Michigan, I believe.
Stories like that are given a lot of attention in order to scare people into voluntarily submitting their info, because that's the only way it'll work. The truth is the government can't go around searching for everyone's hidden cold wallets when we lie and say our crypto got hacked and we made no gains. It's not hard to hide crypto, and to use it completely anonymously from the start so the government can't trace it to you in the first place.
thanks for information and freind
do check my post if u have lil bit time for newbies @kafkanarchy84
The finance ministers of the world will LOVE bitcoin. If you have all the broker customer data it's a dream in transparency.
bitcoin -> Monero -> back to a different bitcoin address. Transparent @rockwellontherun? ;)
Guess the tax authorities will just tell us: «Here is the money you invested as a fact via your broker account. Now you have to show us and prove.» Do you think this is unlikely, Alan?
I would advise NOT using a brokerage account for a start! If you do that, then you could always claim: a). You haven't realised a capital gain & therefore no tax id due, b). You've lost it... i.e sent it to the wrong account.
Although possibly inappropriate, I ended up laughing at the enormity of the above proposition from a purely functional perspective. I'm visualizing this veritable army of millions of civil servants in penguin suits who's only task in life is to track every move of every conceivable coin in an eternally changing market... keeping track of all that, and auditing all those transactions will consume more electricity than used for all the Bitcoin ever mined!
I wonder what's going to happen when they have to move from "looks good, on paper" to "how do we actually IMPLEMENT this?"
The only thing they can possibly do is just start lying about people's financial records, claiming they have "proof" of "tax evasion," clamp down on vendors accepting crypto, and start jailing this or that mark to be set up as an example (much like the guy in Michigan recently busted for making BTC profits on Localbitcoins.com) and given extremely harsh sentences.
This will instill fear in a lot of folks.
Like you said though. The task they set out to accomplish is literally impossible. That is, if enough folks are bold and creative enough to keep living free and utilizing free markets.
It would be such a mess... several countries around the world have already set themselves up to be "Crypto friendly" (Switzerland, Greece and Turkey come to mind), so there will always be available loopholes for those who decide to use them. Of course, then we could argue that governments would only aim to clamp down on "most" users (whatever that means) and let the smartest ones slip through the cracks.
It seems to me that the time for "absolute NO" has come and gone, and at this point the best governments can realistically hope for is playing the game in a "reasonable" fashion, in a similar way to how self-employment income is approached. Yeah, you owe it... and it's up to you to report it... and if you're driving a Lambo on claimed income of $18K a year, we're gonna audit the frak out of you.
I'm inclined to agree, @denmarkguy. I'm interested in what you said about Switzerland, Greece, and Turkey, though. What do you mean by "Crypto friendly"? I'll have to check out those countries.
Sons of bitches!
They're probably doing it at the behest of their controllers in DC & City of London. It's standard operating procedure for a dying system of control to rob their citizens and the citizens of the vassal states.
Fuck legal, they ain't getting a penny off me if they try that shit here.
Blood is boiling dude.
I'm very sorry for the Japanese government.
In my opinion there are few real possibilities for that to happen. The amount of crypto currencies and transactions made, makes tracking them all practically impossible. That without counting direct transactions between users and transactions of crypto currencies directly for services or material goods.
This news seems to me an attempt to stop the increase in the market value of the crypto currencies, rather than a real possibility of taxing the entire crypto market.
This is an excellent comment and you may be dead on with this observation here.
Hehehe, free thinking not allowed?
Politicians should go back to math class before launching proclamations like that. For me it sounds as absurd as telling the population that you can stop a volcanic eruption or an earthquake.
Looks like Japan was way ahead of everyone here.
When many governments were thinking of banning or restricting cryptos, Japan realized it was smarter to accept it, then wait for the critical mass to develop to some point of no return & then enforce their dreaded Taxmen.
Governments like these are more formidable opponents to anarcho-capitalists & crypto-anarchists.
Sadly I have to agree with you. An astute observation, indeed.
Classic example of a situation when people want to regulate something but don't know crap about the topic. Also, is there any info on the tax %?
Some were fearing as high as 50% due to the fact that crypto gains were being defined as “miscellaneous income.” I need to look more deeply into that. The linked articles go into it a bit.
Jesus... Crypto wouldn't be that much fun in an instant.
Geez😵😵😵😵
I have to admit I've been waiting for the governments of the world to kick it into high-stupidity-gear, crypto-wise. The faster they start with policies and regulations based on their insane belief in their own omnipotence, the faster they will show their own IMPOTENCE and their whole house of cards will fall down.
I'm looking forward to it - 2018 is probably THE YEAR of governments thinking they can handle crypto. LOL.
I’m right with you, @anarchospace. Great comment.
This could strangely also be a very positive signal. This is basically the government saying:
We expect huge gains in crypto investments (so therefore we want to tax it).
Keep in mind tax will only apply to gains, so it confirms that in the near future they expect gains in the domain. When a government makes a statement like this, it's likely to be picked up by large investors (who probably already have great experience with minimalizing their tax rates).
I wish the Japanese government good luck with applying their new rules, it seems like a near impossible thing to do btw. How will they treat anonymous accounts on decentralized exchanges for example..? They will try to apply a centralized governing system to decentralized systems, that's probably not going to fly well.
As crypto is now an officially recognized currency here, I’m not so sure about that...
Well, that's what I understood from the article you mention in your blog:
https://www.bitsonline.com/japan-tax-digital-asset-gains/
(I actually read that before commenting, I should have known to just simply stay on steem)
Yeah, looks like you are right.
I am just wondering about folks who work for BTC startups and choose to recieve their salary in BTC... Can’t imagine it wouldn’t be taxed. More questions.
I also answered too hastily and didn’t emphasize how much I am in agreeance with you about the near impossibility of accurate tracking.
Ok I get the fomula: no tax no state. I myself am no anarchist, think I maybe a classical liberal or anarcho-syndicalist. I believe in some sort of state or political power. However, as stated in the comments regulators know Jack #### about cryptos. Then why not let the crypto space self-regulate? I mean, I don't think that the free market can regulate the free market, so that it will stay free. But maybe a decentralized committee can debate the issues of taxation. Like the community in Steemit discusses software implementations.
I pretty much agree with everything you’ve said here. The problem is you’re asking an irrational and inherently violent entity (the state) to behave rationally and not to violate people.
right but they can only be this violent and irrational when they have central control over something. when something is decentralized in nature it forces people to work as equals.
Because money.
Things like this will only entice the need/use for decentralized exchanges even more. So in some way this is positive news xD
I'm finding the state's reaction to crypto amusing. The penny hasn't dropped yet that it's impossible to track. The UK govt made some noises about 'planning a committee to launch an enquiry look into crypto in 2018'. Can you just imagine all those crusty politicians sitting round trying to pontificate? I want to be a fly on the wall when expert after expert testifies & says 'you've lost, go home'...'it can't be tracked, it can't be taxed, give up'. Eventually the solution will be no tax on income/capital gains, just stick it on goods & services.
Some of the tax cattle are leaving the herd. More will follow.
No wonder Japan government want a piece, the way cryptos are going these days.
Isnt this only a problem as long as people rely on fiat? as long as you get paid in bittcoin governments wont have central control over it.
They will scrutinize vendors at that point and threaten them to reveal sale records, I imagine.
The state wants to take taxes, if there is no tax, no state. It's completely logical, but we still have time to make complex moves and avoid tax.
The taxation isn't the most bothering here, the problem is that governments have the habit of overcomplicating laws. 1. So average people won't see they pay 50%+ taxes(cause it's hidden) 2. With complex laws, it's easier to use loopholes for politicians + their friends. 3. It's easier to punish people cause it's near impossible to follow every law perfectly. That's why they come up with infinite numbers of different tax laws and procedures instead of super simple one where anyone can see the amount of tax paid.
Combine this with 0 knowledge people who want money but too lazy learning about the field they want to regulate. Or at least hire someone who understands it oooooooooor maybe simply listen to their citizens.
I think this is a move to scare off the common person. Over regulation is a way of protecting monopolies and the governments they support.
Hopefully anyone who understands cryptos can see how it benefits them and will give the state information that leaves them fucked and confused but leads them to believe they are still in control while in the crytpo world we are figuring bumps out to make smooth transitions for those who just have no idea... This is the change the world needs ✌🌎💚🌱
I agree with most of this but taxation (taking money from others under threat of violence) most definitely is the problem.
Yeah, but at first I would be happy with better laws to gradually progress towards a different system, less and less and then 0 tax. I doubt it would be possible in an instant. :/
Rich made laws, taxes are avoided with smart investment, reinvestment, and percentage does not play any important role.
Urghhh, this soon? And all minor transactions? Hah! I already have no idea exactly what price i bought mine at. I was just happy to put $20 bucks into this or that. I agree they can be creative, but i don't peg them as "tax evaders" even if all that means is evading bullshit.
Yep. Evading extortion.
And...right!? Lemme go back and find out the price of Steem on X date and I’ll trace that one little SBD I bought and all the others from separate dates separately, through all the exchanges, coin changes, etc, and compile those hundreds of thousands of numbers and dates and get riiiight back to you....
Fuck man. Lol.
thanks for the $0.085 (x conversion rate of usd on 12/12/2017) after taxes upvote ;-)
Great news for decentralized exchanges like Bitshares :-)
My feeling is that this is all headed to somewhere interesting. Will they be able to enforce crypto taxes?
I cannot see any conceivable way it could be enforced according to their guidelines. I predict they will just use fear and violence, singling our this or that individual, making a media spectacle of the absurdly cruel punishment, and thus scaring most into reporting all these things “voluntarily.”
I wonder how this can be police.
Me too. It can’t, realistically. They’ll just use fear and violence as per usual.
Like China trying to ban the whole thing altogether. :-)
i hope all other world will not join this tax all things.
Well, I am pretty sure the US and other nations are right behind (crypto assets are already subject to capital gains tax in America, and the IRS is already jailing people for making undeclared profits).
Thank God the Indian government has not yet made any such moves.
Why does the government want to dig it's nose everywhere:/
Good luck in tracing all of them...thanks for sharing upvt and restmd
In the days to come we'll see many other governments making the same move, why? Cause they want a slice and cause they can...
In U.S. they started to tax on coinbase users
i Think this news only for japan & thanx you so much dear @kafkanarchy84 for sharing . this post #resteem & upvote done .
Thank you.
It's too easy to hide cryptocurrencies. I think the efforts of governments worldwide to control crypto, to tax it, will fail. Ultimately blockchain technologies will make the current notion of a government obsolete.
I think they are simply going to crack down on vendors and exchanges, attempting to make crypto use difficult, and to kill much of the facility and freedom that caused crypto to gain popularity in the first place.
Hmmmm.... Monero and things like it are starting to sound more appealing.
You can say that again.
The controllers are freaking out....omg we will go hide where they can’t see us at all....hahahha
Interesting, this might also have a short term negative effect on the crypto market since a very large part of the volume comes from Japan.. Interesting to see what the effects will be
I agree. It’s a bummer but also an interesting challenge at the same time, and time to see what the crypto community is really made of. People that believe in free markets, I hope.
i really trusted hope other world will not join this tax..
may be
I've done a decent job of tracking all this stuff. When the IRS comes calling.
You've tracked every single, solitary SBD curation payout and marked the exact price at the time of said payout?
Not trying to be annoying here, but that is what the legislation discussed in this post appears to demand.
Yeah....no haha. I did try to keep track of my alt-to-alt transactions with Changeling and Shapeshift. That's enough of a pain in the ass.
Excellent Sharing! Appreciated with Following, upvote and reblog @kafkanarchy84
Thanx you dear @kafkanarchy84 for sharing this Cryponews . resteem & upvote done .
This is very sad news for people living in Japan. I hope it will be very quick. @kafkanarchy
Nice post ..... Taxes play a big role for the improvement of a country. So everyone should pay tax in the right way... @kafkanarchy84
I have to disagree. Taxes are money taken from people under the threat of violence.
Cointracking.info does a lot of this for you almost automatically.
The one thing I noticed is you only get taxed when you pull out to fiat. So if you put 100$ in make some profits and pull 100$ out, you're only taxed on any additional money you take out. With more and more options to but goods using crypto that's where I think it becomes blurry.
I understand the complaints but it's only a matter of time until trading stocks becomes like trading crypto.
Cointracking.info does not follow coins across exchanges for other coins, does it? I’m not sure you’re seeing to mind-boggling complexity here.
Take all the Steem Power payments/rewards I received on a given week in 2016. I have to know the value of Steem at the exact time of each payment across the week (this means potentially 20 separate payments if I posted a lot the week before) and follow each of those separate micro-amounts across exchanges.
“Oh, alright. This 2 SP was from my payout on Monday at 9 AM, now I convert it to Bitcoin and have to track this separate decimal amount of Bitcoin separately from all my other tiny decimal amounts of Bitcoin received at myriad times and myriad market values, AND continue to track each single, solitary Steem payout AND any and all various other coins I may exchange along the way.”
It’s just not possible unless one stays inside all day, stops eating and working.
It’s not a complaint so much as pointing out a mass scale attempt to steal from and financially bind non-violent individuals/producers.
I though in the article it said it isn't taxed until it's withdraw to fiat. If you withdraw daily then it would be complex.
I think the premium version handles crypto transfer and tax tracking, but not 100% sure.
I hate taxation as well, but from what I'm reading is if you keep your earnings in crypto it doesn't get taxed.
All profits are taxed, even those made from crypto to crypto exchanges. At the time of a purchase or conversion to fiat, you are expected to know exactly how much profit has been garnered from each separate, individual coin or decimal portion of coin.
Yeah that's just insane. That kind of detail is almost just saying if you use crypto we will throw you in jail. How will the government be able to prove your information is or isn't correct. Sounds just like a loophole to throw the "unfavorables" into jail.
It does to me too.
Is that so?
What if you just convert everything back to X and convert X into fiat and pay your taxes. If you have more of X than you originally had, then just sell whatever extra X you gained and pay capital gains tax assuming you got it for free.
At least Finland will not tax profits in crypto-to-crypto exchanges and will only tax anything at conversion to fiat or goods or services. Crypto-to-crypto exchanges are not tax events at all.