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Cardano Investors In Japan Come Under Fire For $6 Million In Underreported Taxes
Cardano investors in Japan have come under scrutiny after authorities reported that investors in the asset had underreported their taxes from their trading activities. It was reported that multiple cities in the country had seen profits from trading in Cardano’s native token ADA but had not reported the earnings made from investing in the digital asset.
Authorities are now beginning to strengthen taxation laws around cryptocurrencies given that citizens have taken to using digital assets as a way to evade tax liabilities. Japanese citizens are investing more in cryptocurrencies and avoid paying taxes on them due to their legality being yet to be determined.
Related Reading | FinTech Behind Cardano’s First Stablecoin Launches Bank Accounts And Visa Debit Cards
Cardano Investors Cutting Corners
A report from Japanese publication Nikkei revealed that tax authorities had carried out a simultaneous audit of a number of regions in the country. The large-scale tax audit uncovered 1.6 billion yen in under-reported taxes from profit from digital assets. $12.6 million in missing taxes were identified to be from dozens of people who had not reported their earnings from digital currencies.
ADA price struggling around $2.1 | Source: ADAUSD on TradingView.com
The report also showed that the tax evasion techniques were not limited to individual investors alone. Companies had also taken advantage of these “tax-saving measures” by investing in cryptocurrencies. Of these cryptocurrencies investors had chosen, Cardano ranked as the top choice for investors. According to the report, about half of the missing taxes, $6 million, were attributed to profits made from investors who had bought ADA.
Japanese tax authorities are carrying out investigations on proper ways to acquire tax information to enable them to process the taxes due from crypto investors. It has although brought to light how important it is for there to be legal clarifications surrounding cryptos as they are still a legal grey area in the country.
Getting Listed In Japan And Subsequent Rally
It is important to note that up until two months ago, Japanese investors could not directly access Cardano in their country. This is because the country’s rules for listing cryptocurrencies on exchanges are quite stringent. So investors had to rely on overseas exchanges like Binance in order to gain access to the digital asset. ADA had finally been listed in Japan after five years since the asset was created and Japanese investors could now directly buy and sell the cryptocurrency on their native exchanges.
Related Reading | Grayscale Report Shows The Good, The Bad, And The Ugly Of The Cardano Network
At the time of the listing, ADA was still trading low around $1.2. The months following the listing had then seen the price of the digital asset rally. ADA had then grown about 200% from the time of listing to its peak at the start of September, and the $6 million in underreported taxes from Japanese investors were said to be mostly from the bull rally that occurred about a month after the listing.
Tax authorities continue to monitor trading activities in Cardano, known as “Japanese Ethereum”, in the country. Audits have been carried out in six assets so far, but authorities are paying more attention to ADA given the volume of underreported taxes from its investors.
Featured image from Ethereum World News, chart from TradingView.com
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