Japan says Bitcoin's not currency, but taxable
By Kyoko Hasegawa, AFP
March 8, 2014, 12:00 am TWN
TOKYO--Bitcoin is not a currency but transactions involving it should be "subject to taxation," Japan's government said Friday, in a move that could pave the way for formal regulations on the troubled virtual unit.
Tokyo also said that banks could not broker Bitcoin transactions or open accounts holding the virtual unit, which launched just five years ago, in an apparent bid to clamp down on the digital currency.
But, as regulators around the world grapple with how to handle Bitcoin, the Japanese statement did not specify if Tokyo would immediately begin cracking down on it, or how it would do so, given the unit's opaque nature.
Bitcoin "does not fall under the category of a currency" as defined by Japanese law, the government statement said, echoing the views of central banks in other countries.
And "generally speaking it is subject to taxation if it meets conditions laid out in income tax law, corporate tax law and sales tax law, among others," the statement added.
If Bitcoin transactions were used for money laundering "that would constitute a crime," it said, adding that "there are no Japanese laws that clearly define Bitcoin."
"As a matter of common sense, if there are transactions and subsequent gains, it is natural ... for the finance ministry to consider how it can impose taxes," Chief Cabinet Secretary Yoshihide Suga told reporters Friday.
Asked whether Japan would become a global leader on regulating Bitcoin, Suga said: "We are now sorting things out under the current law and mulling what the government can do."
Unlike traditional currencies backed by central banks, Bitcoin is generated by complex chains of interactions among a huge network of computers around the planet.