Japan's National Tax Agency: Tax investigations into cryptocurrencies in fiscal year 2024 uncovered 4.6 billion yen in unpaid taxes, an increase of over 30% year-on-year.

According to Mars Finance, the Japanese National Tax Agency announced today the results of its 2024 tax investigations, revealing 613 on-site investigations conducted against individuals involved in cryptocurrency transactions. The total amount of tax recovered was approximately 4.6 billion yen, a 31.4% increase from 3.5 billion yen in the previous year, with the number of investigations also increasing by approximately 14.6% year-on-year. The National Tax Agency pointed out that cryptocurrency-related cases significantly exceeded the overall average level of on-site investigations for income tax in terms of both the amount of tax recovered per transaction and the amount of underreported income. Current tax investigations focus on the accuracy of profit and loss calculations, the completeness of transaction records, and the reporting of special transactions such as DeFi, airdrops, mining, and staking. If multiple domestic or international exchanges are involved, all profits and losses must be reported together; otherwise, it may be considered an omission in the reporting. Furthermore, the National Tax Agency stated that it has continuously strengthened the collection and analysis of data on internet transactions and introduced AI technology to assist in screening investigation targets. If an entity is found to have underreported or failed to file a tax return, in addition to paying back taxes, it may also be subject to late payment taxes and surcharges. The maximum surcharge for non-reporting can be 20%, and if there is intentional concealment or falsification, the recalculation tax rate can reach as high as 35% to 40%. At the tax system level, the Japanese government and ruling party are discussing changing the current comprehensive taxation of income from crypto assets to a separate taxation system similar to stocks, with a potential uniform tax rate of 20%. A profit and loss accounting and loss carry-forward mechanism will also be introduced. The direction of these reforms is expected to be further clarified in the tax reform outline at the end of the year.