Japanese Crypto Tax Evader Hit with Year-long Jail Sentence

The Japanese courts have sent an ominous warning signal to would-be crypto tax evaders – by jailing a 56-year-old man who pleaded ignorance of how Japan’s crypto tax laws work.

Per Chunichi, the man, an office worker named Hideji Matsuda, was given a one-year sentence and fined over USD 202,000 by a judge at the Kanazawa District Court in Ishikawa.

The court heard that Matsuda had wilfully neglected to file accurate tax declarations on his bitcoin (BTC) trading in the period 2017-2018, and that he owed over USD 680,000 in taxes. He was found guilty of falsifying data on his tax submissions, claiming that he had earned just a fraction of the USD 1.7m he earned from BTC trading in this time period.

Prosecutors told the court that Matsuda had been “selfish,” although his defense counsel argued for lenience, as he had since filed an amendment in a bid to redress the issue.

When quizzed by lawyers, he told the court, “I still don’t understand how to calculate [tax] on profits earned from [trading] cryptocurrencies.”

The case is unprecedented in Japan, and it was a national first when the Kanazawa Regional Taxation Bureau pushed ahead with criminal proceedings against Matsuda, filing charges against him in March 2020.

Crypto tax is much maligned in Japan, where it must be declared as miscellaneous income, with all crypto trading, mining, and lending-related profits subject to a sliding rate of tax that can rise as high as 55% in some instances.

The government has been challenged on the matter, with some politicians calling for a review and stating that tax rates are currently “too high” in the case of crypto.
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