The Japanese will do everything it can to pay down debt on its social welfare liabilities and that meant also an 8 percent consumption tax on mail ordered products outside of Japan and more recently, the Japanese government announced it will now tax transactions on Bitcoin. Is it possible that the Japanese government fears the consequences of Bitcoin impacting Japan’s financial markets. The idea that Bitcoin can cut out third parties by peer-to-peer transactions is what the Japanese are probably planning for with this tax. A tax may discourage use of Bitcoin which is now priced at ¥45,748 per Bitcoin. Bitcoins are denominated in currencies including the US Dollar and the British Pound with total Bitcoin transactions estimated to be at US$7 billion since Bitcoin’s inception. The Bank of International Settlements have published policy papers on Bitcoin and includes the following summary:
“Bitcoin Digital currencies, and especially those which have an embedded decentralised transfer mechanism based on the use of a distributed ledger, are an innovation that could have a range of impacts on various aspects of financial markets and the wider economy. These could include potential disruption to business models and systems, as well as facilitating new economic interactions and linkages.”
Source: Asia Times
Japan to start taxing bitcoin transactions
By Asia Unhedged
March 4, 2016
The new guidelines proposed by the Japanese cabinet will call for defining the virtual currency as a commodity rather than a currency, according to the financial newspaper Nikkei.
Unlike conventional money, bitcoin is a digital currency that is bought and sold on a peer-to-peer computer network independent of central control. Over the past year, the total value of all the bitcoins minted is about $7 billion.
Nikkei said the following transactions will be subject to tax: gains from trading bitcoins on online exchanges, purchases made with bitcoins, and companies earning revenue from bitcoin transactions.
The new rules are expected to prohibit banks from handling bitcoins and securities firms will be barred from brokering bitcoin trades. The rules are expected to be written as to be applicable to similar currencies in future, the Nikkei reported.
Last week, US Federal Reserve Chair Janet Yellen said the US Congress should consider regulating virtual currencies such as bitcoin.
The new proposals are a reaction by Japan’s government in the wake of the collapse of Mt. Gox – once the world’s once largest bitcoin exchange.
Mt. Gox filed for bankruptcy protection in Japan on Friday, saying it may have lost 850,000 bitcoins due to hacking into its computer system. The total value of the loss is about half a billion dollars.
The virtual currency has been charged as allowing criminal enterprises a new way to launder money, and purchase and sell illicit products.
Other countries have taken a dim view of the currency.
Recently, Beijing banned financial institutions from trading in bitcoin due to the risks involved. In response, Shanghai-based BTC China, the world’s largest bitcoin exchange by volume, imposed new regulations to curb bitcoin trades.
And Russia warned against the use of bitcoin, saying treating it as a parallel currency is illegal.