According to the "Coinpost" report, the Japanese Tax Bureau recently released a document summarizing the general tax treatment of NFTs. In addition to listing cases of income tax levied on NFTs, it also provides guidance applicable to the collection of consumption taxes and other situations.

Since the acquisition and use of in-game tokens are very frequent and difficult to evaluate, they will be calculated uniformly at the end of the year. The document explains that NFT rewards obtained from blockchain games are in principle “miscellaneous income” and are subject to “income tax.” However, if in-game tokens obtained as rewards can only be used within the game, that is, cannot be exchanged for assets outside the game, they are not considered taxable income.

The document states that "income taxes" are levied if an individual creates an NFT and sells it to a third party (a primary distribution), or if the person who purchased the NFT resells it to another person (a secondary distribution). If you give NFT to others for free (such as airdrop), the giving party may not be taxed, but the giving party may be taxed.

The document mentioned that NFTs should be taxed if they are received as consideration for services, as well as NFTs given as gifts when purchasing certain products. The document added that if an NFT granted by purchasing a product cannot be exchanged for other assets and its market price is difficult to calculate, the market price of the NFT will be set to 0 yen.

In addition, when an individual creates an NFT and sells it to Japanese consumers through the market and receives compensation for it, the creator of the NFT will be levied a "consumption tax." Similarly, as a secondary sale, when the purchased NFT is sold to others, if the sale is made through a Japanese operator, "consumption tax" will be levied on the operator.

For the previously unclear "situations in which NFTs are stolen or lost due to improper access", the principled treatment in tax law has also been clarified. The document also mentioned that if the stolen NFT is a business asset, etc., the loss can be included in the necessary expenses when calculating the amount of business income or miscellaneous income.

This article Japan issues "NFT taxation guide": covering game rewards, airdrops, and secondary sales. First appeared on Blockchain.