Cardano Investors in Japan Have Underreported Taxes by $6 Million

Tax authorities in Japan are increasing scrutiny over tax processing on digital assets after a large-scale audit found that local Cardano investors have underreported taxes by up to $6 million.

Japanese Tax Authorities Accuse ADA Investors of Tax Evasion

According to a report by Nikkei, Cardano investors in Japan have underreported their taxes, failing to pay as much as 1.4 billion yen (about $12.6 million), out of which, gains from ADA accounted for about $6 million.

Based on an individual involved in the audits, many investors based in the Kanto region, which includes the Greater Tokyo Area, as well as in the cities of Saitama, Tochigi, Gunma, Niigata, and Nagano, profited specifically from ADA’s price rally in 2021.

Apparently, investors who were buying and selling ADA did not declare their profits or failed to pay taxes with the means of deception. So far, local authorities have conducted six cryptocurrency-related audits. Reportedly, the one in the Kanto region has been monitoring ADA transactions for years.

In Japan, profits on cryptocurrency trading, mining, and lending must be declared as miscellaneous income. Moreover, it is subjected to a tax rate of up to 55%. Many have called for a review of the tax rate, claiming it is “too high” as in the case of crypto.

Cardano: The Japanese Ethereum

Given that more than 90% of those who participated in Cardano’s initial coin offering (ICO) between 2015 and 2017 were from Japan, Cardano often gets called the “Japanese Ethereum.”

Despite the strong interest, ADA only became available for trading in Japan in August, with Bitpoint becoming the first local exchange to overcome strict regulatory hurdles and list the asset. Prior to that, Japanese investors could only trade ADA at overseas exchanges such as Binance, Kraken, or Bittrex.

ADA has gained over 1,100% in value since the start of the year, hitting an all-time high above $3 at the beginning of September. Since then, the asset’s price has been mostly in decline with ADA currently trading at $2.32 at the time of the writing.