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According to the 2024 tax audit results released by the Japanese National Tax Service, a total of 613 on-site investigations were conducted on individuals trading virtual assets. This represents a roughly 14.6% increase from the previous year.
The amount of tax collected increased by approximately 1.1 billion yen from 3.5 billion yen the previous year to 4.6 billion yen. The concurrent increase in the number of investigations and the amount collected indicates that tax authorities are strengthening their oversight of virtual asset transactions.
The Japanese National Tax Service pointed out that the amount of tax collected per case and the amount of unreported income in virtual asset-related cases significantly exceeded the average level of general income tax field investigations.
This suggests that the nature of virtual asset trading, characterized by frequent high-value transactions and complex transaction structures, creates an environment prone to underreporting. In particular, the high fines imposed per single case demonstrates a significant number of cases of intentional tax evasion and large-scale underreporting.
The current tax audit focuses on three main areas: the accuracy of profit and loss calculations, the completeness of transaction records, and the appropriateness of reporting and processing special transactions such as DeFi, airdrops, mining, and staking.
In particular, the Japanese National Tax Service emphasized that when using multiple domestic and international exchanges, all profits and losses must be reported in aggregate. Omitting transaction details from certain exchanges could be considered an omission, potentially resulting in surtax penalties.
Reporting requirements for new forms of virtual asset income, such as DeFi protocol use, airdrop receipts, mining rewards, and staking profits, have also been clarified. Unlike traditional trading, these transactions present a significant source of confusion for taxpayers due to the complexities of tax timing and methods.
This announcement by the Japanese National Tax Agency demonstrates that alongside the growth of the cryptocurrency market, the Japanese tax authorities' oversight system is also becoming more sophisticated. The continued increase in the number of investigations and the amount of tax levied suggests that tax investigations into virtual asset transactions will intensify in the future.
Kim Kyung-hwan, a tax accountant and head of EL Accounting, advised, "Virtual asset traders must thoroughly record all transaction details on all exchanges and report all new forms of income, such as DeFi and staking, without fail." He added, "Users of overseas exchanges, in particular, are at a high risk of being subject to additional taxes due to failure to report, so they need to be especially careful."
As such, the domestic virtual asset industry predicts that Japan's strengthened coin tax management will also impact the taxation policies of Asian countries, including Korea.
Joohoon Choi joohoon@blockstreet.co.kr
