5 June 2019 06:55 EDT . 2 min read

Crypto Tax Evasion ‘Rampant’ in Japan

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Cryptocurrency tax evasion is rife in Japan, per a report by local media. It claims that some 50 people and 30 companies have failed to declare over USD 92 million worth of cryptocurrency transactions.

Asahi Shimbun claims that the companies in question include a Tokyo-based enterprise that trades using brokers and social media platforms. The newspaper adds that the said company “concealed” almost USD 2 million worth of transactions in the period June 2017 to May 2018.

According to the report, its findings are based on investigations made by prefectural tax authorities, which have discovered that cryptocurrency-related tax evasion and money laundering are “rampant” in the country.

The report’s authors produced evidence to back up their claims, including a scan of a tax return that appears to write off transactions worth over USD 2 million as “business expenses.”

As reported in January 2019, Japan’s top financial regulator, the Financial Services Agency (FSA), wants to close a crypto investment loophole. The FSA reportedly believes that companies and individuals have been taking advantage of this legal “loophole” and last year had “problems” collecting some USD 74m worth of tax or fines on unregistered cryptocurrency investment deals.

A range of Japanese laws (including commercial legislation) leave room for “ambiguity” as to whether unregistered companies are subject to regulation if they receive funds in cryptocurrency, rather than Japanese yen or other fiats.

Meanwhile, a meeting of Russian, Polish, Belarusian, Georgian, Kazakh, Moldovan, Ukrainian and Latvian prosecutors held in Minsk, Belarus is set to discuss the need to ensure citizens pay tax on cryptocurrency-related earnings.

Per Belarusian news outlet TUT, Alexander Konyuk, the Attorney General of Belarus told the group that cryptocurrency use “carries serious tax evasion risks.” The group is expected to discuss cryptocurrencies further during the summit.

And a Russian judge has insisted that the country’s long-awaited crypto legislation must contain legal definitions of terms like “cryptocurrency.” Moscow had hoped to avoid all mention of “cryptocurrency,” “mining” and “token” in its legislation in an effort to avoid giving cryptocurrency any sort of legal standing.

Per media outlet Federal Press, Lyudmila Novoselova, the chair of Russia’s Intellectual Property Court, told the Presidential Council on Civil Legislation in Yekaterinburg that progressive, pro-business regulations were required, rather than sweeping “prohibitions.”