January 20, 2023
By Sharan Kaur Phillora
According to Coinpost, the Japanese National Tax Agency released a general tax treatment document related to NFT. In addition to listing the cases of vying for income tax on NFT, the guide also released cases of consumption tax and other situations. Because the acquisition and use of in-game tokens are very frequent and difficult to evaluate, they will be calculated uniformly at the end of the year.
Here’s what we know:
Japan’s National Tax Agency [NTA] has reportedly issued a set of guidelines that state that if an individual creates an NFT and sells it to a third party (a primary distribution) or if the person who bought the NFT resells it to another person (a secondary distribution), the profit is “income taxable” and subject to tax.
If one person gives an NFT to an acquaintance for free, the party giving it may be taxed. When someone makes an NFT and sells it to Japanese consumers through the market to get paid, the NFT maker will be subject to consumption tax.
In addition, as a secondary circulation, when the purchased NFT is sold to others, if it is sold through a Japanese operator for consideration, consumption tax will be levied on the operator.
Remuneration obtained through blockchain games is, in principle, classified as “miscellaneous income” and is subject to income tax. However, if the in-game tokens obtained as rewards can only be used in the game, they are not considered taxable objects of income tax.
For now, NFT taxation in Japan is limited to a few basic conditions as mentioned above. This means that more detailed conditions may be released in the future. As such, it’s important that any individual involved in the buying and selling of NFTs keep an eye on any updates related to taxation rules in order to ensure compliance.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.