The Japanese National Tax Agency has put a hefty price tag on capital gains made through crypto trading. According to a Bloomberg report, crypto traders are legally obligated to pay anywhere from 15 to 55 percent of their earnings to the Japanese government; gains made through forex exchange and trading stocks are typically taxed at roughy 20 percent.

Earnings will need to be reported as ‘miscellaneous income’ by the end of Japan’s tax season, which runs from February 16 to March 15.

Japan has long been considered one of the most crypto-friendly nations in the world. It was the first country ever to legally declare Ethereum and Bitcoin as legitimate forms of payment with the Japanese Virtual Currency Act of April 2017. The VCA is often credited with much of the meteoric rise in the valuation of BTC and ETH in June of 2017 and the subsequent movement of the cryptosphere toward mainstream fintech.

Therefore, the news that capital gains made through crypto are being taxed at such a high rate has gotten some mixed reactions within the crypto community. Bloomberg reported that some individuals who have made their fortunes trading crypto have already made the decision to leave Japan for jurisdictions that don’t charge any tax on crypto capital gains, like nearby Singapore.

Governments Around the World Are Still Developing Tax Codes For Crypto (Or Not)

The Japanese government does stand to have much to gain through crypto taxation. Some reports estimate that over the past several months, 40 percent of BTC trades have been made against the Japanese Yen.

Although Japan may be one of the nations with the highest tax rates on crypto, they certainly aren’t the only country to be seeking to collect on gains made through digital assets. Governments all over the world have been seeking frantically to find a way to tax crypto by creating new legal structures, or (in some cases) stretching older tax codes to encompass the cryptosphere.

The Indian government sent taxation notices to thousands of cryptocurrency traders in mid-January; reported that the South Korean government created the Virtual Currency Taxation Task Force near the end of 2017. Additionally, in the United States, the Internal Revenue Service (IRS) legally classified crypto as property subject to tax (similar to gold or real estate.)

Some Crypto Traders Have No Plans to Report Gains

However, the legal structures that have hastily been put in place by governments to tax crypto don’t always make it clear how to file for capital gains on crypto or how much is owed.

What’s more, the anonymous nature of cryptocurrencies seems to have emboldened crypto holders not to report any of the profits that they’ve earned on crypto. In early January, the Motley Fool published a report estimating that 36 percent of Bitcoin investors in the United States ‘plan to knowingly and willingly commit tax fraud by evading capital gains tax in the upcoming tax season.’

By many accounts, they’re likely to get away with it. Most of the world’s governments are still grasping the basic of how crypto and blockchain operates. While KYC requirements and AML measures are increasing in many areas of the world, it’s likely that a year or two will pass before global legal systems will have a strong set of codes in place for dealing with crypto.