Japan mulls taxing Bitcoin transactions

Japan is looking at ways to tax Bitcoin transactions, in the wake of the spectacular failure of the Tokyo-based MtGox exchange after a theft of half-billion-dollars worth of Bitcoins.

The Japanese Finance Ministry and the national tax agency were studying possible rules that could govern transactions using the digital currency, the Yomiuri Shimbun newspaper said today.

According to authorities, purchases made with Bitcoin could be subject to consumption and corporate taxes, even though the unit was not a legal currency, the newspaper said without citing sources.

The report said many countries, however, including Japan did not have concrete frameworks to levy taxes (on Bitcoin transactions).

Japan's sales tax , is meanwhile set to rise 5 per cent to 8 per cent in April.

Last week, MtGox, which at one time reportedly processed 80 per cent of global Bitcoin transactions, sought bankruptcy protection from the Tokyo District Court and admitted losing half a billion dollars worth of the digital currency.

According to a company lawyer 750,000 Bitcoins belong to customers had gone missing along with MtGox's own store of the currency, was said to be around 100,000 units.

Meanwhile, the defunct Bitcoin exchange MtGox has come out with some more information about its problems, on its web page which feature an ''Application for commencement of a procedure of Civil Rehabilitation''.

The new statement said: ''At the start of February 2014, illegal access through the abuse of a bug in the Bitcoin system resulted in an increase in incomplete bitcoin transfer transactions and we discovered that there WAS a possibility that Bitcoins had illicitly been moved through the abuse of this bug.''

MtGox apparently thinks for recovery of the currency, the exchange needed to the revived.

'' In order to increase repayments to our creditors, it is necessary to explore the possibility of having MtGox Co Ltd continue its business. This is why the civil rehabilitation procedure has been chosen, Rebuilding MtGox Co Ltd under the supervision of the court in a legally organized procedure while giving proper explanations will not BE for the sole benefit of the company but for the whole of that Bitcoin community.

All efforts will now be made to restore the business and recover damages to repay debts to creditors. We hope for the understanding and cooperation of all.''