Japan’s National Tax Agency (NTA) has updated its official nonfungible token (NFT) taxation guidelines. For example, NTA will calculate the total income of a citizen’s currency at the end of each year so they will only have to pay taxes once.
It has been reported that officials hope that the change will encourage traders to pay NFT taxes on time, as their numbers are skyrocketing monthly. It’s a big week for Japanese NFT traders as the country’s National Tax Agency has updated its taxation guidelines.
However, the main update is that NTA will now tax citizens once, at the end of each year. The Agency will tax all of the income generated from NFT trading throughout the year. Japan’s tax update might facilitate NFT taxation for both sides: the NTA will be able to track and evaluate income transactions easier while NFT traders will know when and how to pay their taxes.
Japan’s National Tax Agency stated:
“In-game currency (tokens) are frequently acquired and used, and it is complicated to evaluate each transaction.”
The report said that every time a trader sells an NFT, their will pay tax on this income. NFT creators will face consumption taxes for each NFT they create and sell to another Japanese citizen.
In 2022, many countries around the globe have started taxing NFT transactions and for good reason. After all, 4% of the US population currently owns an NFT, and some pieces sold for over $60 million! Of course, state officials had to intervene one way or another. For instance, the American tax collection agency IRS has included NFTs to its list of tax codes in October 2022.
Thus, there’s still a lot of debate going on, as nobody can say whether the NFTs should be labeled as “commodities” or “collectibles.” The European Union is still working through the details on how to tax NFTs.
Source: NFT Evening