Bitcoin users in Japan no longer have to pay the 8% consumption tax on bitcoin transactions as of today, July 1. Under the “Cabinet Order for Partial Revision of the Order for Enforcement of the Consumption Tax Act,” digital currencies are exempt from consumption tax.
The revised law abolished consumption tax on digital currencies, but other taxes such as personal income tax, capital gains tax or corporate income tax still remain, according to Bitcoin.com.
Currency, checks, and promissory notes fall under the payment methods governed by the Foreign Exchange and Foreign Trade Act and are exempt from taxation under the Consumption Tax Act, according to the National Tax Agency, cited by bitflyer. In addition, the prepaid methods of payment, which electronic money is generally considered to be, that were governed by the Payment Services Act are considered under the Consumption Tax Act to be “physical certificates” and are exempt from the consumption tax.
Major Implications For Bitcoin
Yuzo Kano, CEO of bitflyer, the largest Japanese bitcoin exchange by volume, told Bitcoin.com that the elimination of the consumption tax will have three ramifications.
Users will no longer have to buy more expensive bitcoins, so Japanese users can send bitcoins abroad without paying a price gap.There will also be a psychologically positive impact that will allow the Japanese to consider bitcoin more like a real currency. Kano noted that bitcoin is a legal payment method in Japan and not a currency.
Most importantly, bitcoin exchanges will be able to purchase bitcoins abroad, giving them access to global markets. Resident exchanges have been taxed for buying bitcoin and altcoins from non-residents.
Japan Was Restrictive
Japan is the sole economy among the top seven major industrialized nations in the world that taxed bitcoin buying. Discussions to end the tax began last year when a member of Liberal Democratic Party, Japan’s ruling party, asked Japanese Finance Minister Taro Aso during a Parliamentary session meeting not to impose the tax on bitcoins in line with the international trend.
Japan is seeing a marked increase in the number of brick-and-mortar stores accepting bitcoin. Tokyo-based bitcoin exchange operator ResuPress revealed that Japan as of September 2016 saw 2,500 stores across the country accepting bitcoin as a method of payment,. That number is the quadrupled total from the number of stores accepting the cryptocurrency in he prior year.
Numerous Benefits For Bitcoin Users
The tax cut could potentially further drive Japanese citizens to adopt the cryptocurrency. Japanese users became able to pay utility bills with bitcoin at cheaper rates in November 2016.
One bitcoin exchange official told Japanese publication the Nikkei Asian Review last year that “administrative work will be reduced substantially,” as a result of the ruling.
Seizing the opportunity to provide supply for the demand, up to 18 companies in May applied for a new license from regulators to open bitcoin exchanges. Ten out of the 18 companies were new applicants, including Internet giant GMO, which was planning to launch a bitcoin trading platform.
Retailers have already gotten on board. Recruit Lifestyle, the retail arm of Japanese conglomerate Recruit Holdings, has partnered bitcoin exchange and services firm Coincheck to introduce bitcoin payments at its stores. Bic Camera, a Tokyo-based consumer electronics retail chain, has partnered bitcoin exchange bitflyer to accept bitcoin payments. Midori Kanemitsu, chief financial officer at bitflyer, further told the Nikkei Asian Review in May that the number of retail storefronts accepting bitcoin is expected to rise to 300,000 or so in 2017.
Featured image from Shutterstock.
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