In what will come as welcome relief to bitcoin adopters in the country, Japan is set to end its 8% ‘consumption tax rate’ imposed on buyers of bitcoin through digital currency exchanges.
Japan is now looking to end the sales-tax collection on transactions related to purchases of virtual currencies like bitcoin, come spring.
A report from Japanese publication the Nikkei Asian Review reported that discussions between the Japanese Financial Ministry and the country’s Financial Agency this year is expected to end in a formal decision by the end of the year. A ruling-coalition tax panel will join the talks, with the decision expected to be one in favor of bitcoin and cryptocurrencies.
Japan is the sole economy among the seven major industrialized nations in the world to tax bitcoin buying. Discussions to end the tax began earlier this year when a member of Liberal Democratic Party, Japan’s ruling party, asked Japanese Finance Minister Taro Aso during a Parliamentary session meeting:
“Can’t you consider not imposing consumption tax on bitcoins in line with the international trend?”
To this, Aso defended the taxation of bitcoin, pointing to countries like Australia that tax cryptocurrencies like bitcoin. Notably, Australia has since curbed its goods and services tax (GST) levied on bitcoin buying. Japan looks set to follow.
The new ruling will almost certainly encourage bitcoin adoption among investors and adopters who will see the cryptocurrency as a store of value or a transactional currency alternative to fiat money. 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 now sees 2,500 stores across the country accepting bitcoin as a method of payment, as of September 2016. That number is the quadrupled total from the number of stores accepting the cryptocurrency last year.
Also, Japanese users will soon be able to pay utility bills with bitcoin, at cheaper rates come November 2016. The tax-cut with bitcoin buying could potentially further drive Japanese citizens to adopting the cryptocurrency.
Furthermore, bitcoin and digital currency exchanges will also catch a break, without having to deal with the existing consumption tax.
One official from a major bitcoin exchange tells the publication that “administrative work will be reduced substantially,” as a result of the expected new ruling.
Featured image from iStock.Follow us on Telegram.