Japan has been making quite some noise in the crypto-verse. The Japanese government has been observed changing its tax regulations while relaxing on other things in the sector. Now, the government is proposing a tax on NFTs after announcing in December that it would relax the crypto tax rules on firms.
Japan’s National Tax Agency [NTA] has reportedly issued a set of guidelines in order to tax NFT transactions. This was brought to light following the lack of clarity around Japan NFT traders. Moving on from this ambiguity, investors will be levied with income tax if an NFT is sold to another party.
The term “business” or “miscellaneous income” refers to primary NFT sales. Secondary sales fall under the category of transfer revenue. This wasn’t all. Creators will also be required to follow new tax rules.
Japan NFT Creators must pay consumption tax if they gain money from selling their NFTs to customers. The NTA will presumably soon provide further information on these specific uses of consumption tax for Japan’s fervent NFT user base.
It should be noted that several other countries have included NFTs in their tax regime. The United States Internal Revenue Service [IRS] added NFTs to its tax codes in October 2022. The UK also followed suit and did the same.
Japan: NFT rewards through blockchain games will also be subject to tax
In addition to NFTs, profits acquired from blockchain games are also expected to be taxed. Elaborating on the same, the statement read,
“In-game currency [tokens] are frequently acquired and used, and it is complicated to evaluate each transaction.”
Therefore, while calculating taxes at the end of the year, only the total revenue calculated using in-game money would be taken into account. Additionally, it states that if the asset is not transferred outside of the game, taxes do not apply.