The ministry of economy and finance is considering how to calculate the’base price’ of the cryptocurrency and who will announce it, because a base price is required for taxation of gains on the transfer of cryptocurrency (virtual asset), which is scheduled to be implemented from October next year.
The key to taxing capital gains is to accurately identify the price at which the taxpayer bought and sold cryptocurrency. However, if the cryptocurrency is transferred through a personal electronic wallet rather than through a virtual asset provider (VASP) such as an exchange, it is difficult to specify the purchase/sell price. The ministry of economy and finance thought of a method of disclosing the base price in order to block the situation of paying less or no tax by intentionally lowering the transfer price. An official from the Ministry of Strategy and Finance explained that “when a transaction or gift is given between relatives or acquaintances, the transfer price may be distorted.”
If the government establishes a reference price for cryptocurrency, it is expected to be the first case in the world. In the United States, when profits are generated from cryptocurrency trading, it is necessary to calculate the’fair market value’ in US dollars according to the time of the transaction and report it to the IRS. However, that does not mean that the IRS sets a clear standard for fair market value. At the time of transaction, the taxpayer must report it based on the market price.
