TechFlow news — Japan's National Tax Agency released today a general guidance document on tax treatment regarding NFTs. The guidelines include case examples for income tax and consumption tax related to NFT transactions.
The guidance states that profits from the creation and sale of an NFT by an individual to a third party (primary distribution), or from resale of an NFT by a buyer to another person (secondary distribution), are subject to "income tax." If someone gives an NFT as a gift to an acquaintance free of charge, the giver may not be taxed, but the recipient could be liable for taxation. When an individual creates an NFT and sells it through a marketplace to Japanese consumers for compensation, the creator will be subject to consumption tax. Additionally, in secondary market transactions where a purchased NFT is sold to another party through a Japanese operator for consideration, the operator will be liable for consumption tax. Income earned through blockchain games is generally classified as "miscellaneous income" and thus subject to income tax. However, in-game tokens received as rewards that can only be used within the game are not considered taxable under income tax.
Furthermore, the guidelines clarify the general tax principles for previously ambiguous situations such as NFT theft or disappearance due to unauthorized access. However, since the FAQ only provides general explanations, detailed calculation methods for tax filing should be confirmed with tax professionals or the National Tax Agency.Original link
