Japan is reportedly close to dropping the 8% sales tax for bitcoin purchases.
Japanese buyers pay an 8 percent consumption tax on top of other fees to get ahold of bitcoins at regulated digital currency exchanges. Japan is the only country among the Group of Seven industrial economies that taxes bitcoin purchases.
However, authorities in Japan are reportedly looking to end sales tax collections on digital currency purchases. In October, members of the Finance Ministry and Financial Services Agency are discussing to “reduce costs for buyers and relieve operators of virtual currency exchanges of the administrative burden related to the tax.”
Now, documents obtained by CoinDesk showed that the plan “could take effect as early as July 2017.”
The annual tax document, prepared by the ruling Liberal Democratic Party and its coalition partner Komeito party, still needs to be approved by the Cabinet. And if it is approved, “the plan would institute a grace period in June of next year, with the tax exemption becoming official the following month,” according to the news outlet.
The Japanese Diet enacted a bill in May regulating virtual currency exchanges and their operators in the country. The law has boosted public trust in cryptocurrency, whose image was tarnished following the 2014 collapse of now infamous Mt. Gox exchange and the subsequent arrest of its CEO, Mark Karpeles. Now, FSA has been given the mandate to conduct on-site inspections and require operators to follow know-your-customer practices.
The bill, which revises the existing fund settlement law, also defines digital currencies as means of payment—much like prepaid cards. The finance ministry is expected to use the new definition as grounds to eliminate the consumption tax.
There are currently about 2,500 stores across the country that accept bitcoin as means of payment for shopping and food, according to Tokyo-based bitcoin exchange operator ResuPress.
Current bitcoin price and trade volume
Bitcoin continues its price climb on Friday, trading at $771.49 with a trade volume of $88.02 million.