Japan’s National Tax Agency has published an updated guideline regarding the taxation of NFTs. Among other things, NFT transactions in blockchain-based games will be subject to taxation.
Japan’s National Tax Agency has issued guidelines for the taxation of NFT transactions, including those in blockchain games. The authority published guidelines offering a simplified method for taxing these transactions, which are multiple and frequent.
The NTA said that “in-game currency (tokens) are acquired and used frequently, and it is complex to evaluate each transaction.” As such, taxation will only consider total income based on in-game currency, evaluating it at the end of the year. It also mentions that taxation does not apply if assets are not exchanged outside the game.
There is some lack of clarity regarding the taxation of NFTs, and investors in the space are seeking more details on the actual tax calculation. Nevertheless, investors are now aware that income tax is applicable if the NFT is sold to another party. Business or miscellaneous income applies in the case of the primary NFT sale. “Transfer proceeds” is applicable in case of secondary sale.
NFT makers will also face their own taxation. If manufacturers sell their NFTs to Japanese consumers and earn from them, they face a consumption tax. There are more specific applications of the consumption tax that the NTA will soon clarify for Japan’s enthusiastic NFT use base.
The national tax agency isn’t the only one focusing on NFTs
Japan is far from the only country to publish tax guidelines for NFTs. The United States recently amended its tax forms to clarify the matter. The Internal Revenue Service has updated guidance that NFTs will be taxed in the same way as other cryptocurrencies.
The United Kingdom has similarly taxed NFTs. The assets are subject to capital gains tax or income tax and follow the same taxation rules as typical cryptocurrencies.
79% of Indians want the government to regulate crypto and NFTs, which could change the status quo. India has also imposed strict taxation for cryptocurrencies, which include NFTs. This includes minting of NFTs, which has somewhat dampened the interest in the NFT market in the country.
Japan Is Taking Big Steps Into Crypto
While Japan is taxing crypto, the country has shown interest in the Web3 sector. There have been several developments in recent months including tax cuts proposed by crypto advocates to retain talent in the country. The country hopes to revive its economy by focusing strongly on the Metaverse.
Banks are also joining the digital revolution. Nomura, one of Japan’s largest banks, is planning to launch crypto trading for institutional clients as early as 2023. The firm will offer services such as crypto trading, DeFi, stablecoins and NFTs.
BeInCrypto has reached out to the company or the person involved in the story for an official statement regarding the recent development, but has yet to hear back.