Japan considers Bitcoin tax after MtGox failure

2014-03-04 12:35:10

(MENAFN- AFP) Japan is looking at ways to tax Bitcoin transactions, a report said Tuesday, in the wake of the spectacular failure of the Tokyo-based MtGox exchange after a half-billion-dollar theft.The finance ministry and the national tax agency are studying possible rules that could govern transactions using the digital currency, the Yomiuri Shimbun newspaper said.Authorities believe purchases made with Bitcoin can be subject to consumption and corporate taxes, even though the unit is not a legal currency, the Yomiuri said without citing sources."However, many countries including Japan do not have concrete frameworks to levy taxes (on Bitcoin transactions)," the Yomiuri said, leaving officials basically stumped.Japan's sales tax is set to rise from the current five percent to eight in April.MtGox, which at one time reportedly processed 80 percent of global Bitcoin transactions, last week sought bankruptcy protection from the Tokyo District Court and admitted that it had lost half a billion dollars worth of the digital currency.A company lawyer said 750,000 Bitcoins belonging to customers had gone missing, along with MtGox's own store of the currency, which she said was around 100,000 units.That number of Bitcoins would be worth around $575 million, calculated against the price on CoinDesk around 0230 GMT on Tuesday.

The Yomiuri report came as regulators around the world grapple with the crypto-currency, which is generated by complex chains of interaction among a huge network of computers.US Federal Reserve head Janet Yellen said the Fed had no powers over a currency that only exists virtually and has no central authority behind it.Several countries, including Russia and China, have already heavily restricted how Bitcoins can be used.Japanese Finance Minister Taro Aso said Tuesday Tokyo was still studying what to make of MtGox's failure."It's difficult to know whether there was a crime or a simple corporate failure," Aso told a regular briefing, while admitting that officials were still reviewing which government body should handle the case.The global virtual currency community was shaken by the shuttering of MtGox, which had frozen withdrawals in early February because of what the firm said was a bug in the software underpinning Bitcoin that allowed hackers to pilfer them.Supporters rallied round, insisting Bitcoin itself is sound and the problems lay with MtGox, which they said was badly managed and unable to cope with the burgeoning popularity of the young currency.MtGox's woes had depressed the global value of Bitcoin, sending it around $430 a week ago. The value has since rebounded and it was trading at about $677 Tuesday.

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