The incidence of tax evasion cases involving cryptocurrency assets surged by 35% in 2022.
As per reports from Japan’s tax authorities, the mean value of undisclosed cryptocurrency income witnessed a decline of 19% in the same year.
On November 24, the Japanese National Tax Agency (NTA) released its annual recapitulation of tax investigations, featuring a comprehensive examination of crypto tax evasion. The 13-page report disclosed that the NTA launched 615 investigations into individuals’ crypto holdings, based on their tax declarations for 2022, marking a notable increase from the 444 investigations conducted in 2021. Of these, 548 cases were found to have tax violations, indicating a 35% surge compared to the 405 crypto tax evasion cases in the previous year.
However, the average value of undisclosed cryptocurrency holdings demonstrated a decline, falling from 36,590,000 Japanese yen (approximately $245,000) in 2021 to 30,770,000 yen ($206,000) in 2022.
In August, Japanese regulators, including the NTA and the Financial Services Agency (FSA), affirmed that citizens would be exempt from capital gains tax on unrealized profits in cryptocurrency. This exemption implies that individuals will not be liable for approximately 35% of taxes on crypto assets held without trading activities during the fiscal year.
Notably, Japan recently joined a group of nearly 50 nations committing to promptly incorporate the Crypto-Asset Reporting Framework into their domestic legal systems. This framework represents a novel international standard facilitating the automatic exchange of information between tax authorities.
+——————————————————-+
| Tax Evasion Statistics |
+——————————————————-+
Year | 2021 | 2022 |
---|---|---|
Number of Investigations | 444 | 615 |
Cases with Violations | 405 | 548 |
Increase in Cases | – | 35% |
+——————————————————-+ | ||
Undeclared Crypto Holdings | ||
+——————————————————-+ | ||
Average Value (in JPY) | 36,590,000 | 30,770,000 |
Average Value (in USD) | $245,000 | $206,000 |
Change in Value | – | -19% |
+——————————————————-+ |