Japan has been a pioneer in crypto taxation, implementing rules to tax crypto gains and enforce reporting for both individuals and institutions. With the global adoption of the Crypto-Asset Reporting Framework (CARF) and the upcoming CRS 2.0 requirements, Japanese authorities have further strengthened compliance measures, aligning domestic obligations with international standards. This ensures transparency, cross-border tax reporting, and robust monitoring of crypto-asset activities.
Understanding CARF and CRS 2.0
The Crypto-Asset Reporting Framework, introduced by the OECD, enables the automatic exchange of information regarding crypto-assets. CRS 2.0, effective from FY2024, extends reporting to financial accounts held by non-residents, including crypto holdings.
In Japan, the National Tax Agency (NTA) requires financial institutions, exchanges, and custodians to submit detailed account information. This includes transaction volumes, account balances, and beneficial ownership. CARF and CRS 2.0 compliance ensures transparency and mitigates the risk of regulatory penalties while enhancing Japan’s reputation for financial integrity in global crypto markets.
Who is Affected and What They Must Do
Japanese RCASPs including banks, custodians, and crypto exchanges must implement due diligence procedures, transaction monitoring, and reporting systems. Crypto users, both individuals and entities, must provide accurate identification and transaction information. Key actions include:
- Verifying user identity and tax residence
- Reporting cross-border transactions and relevant crypto activity
- Maintaining records for audit and compliance purposes
The Role of the Tax Identification Number (TIN) in Japan
At the core of CARF compliance is the Tax Identification Number (TIN). Every participant, individual or entity, must have a verified TIN linking all reportable transactions to the correct tax jurisdiction. In the CARF XML Schema, the TIN is mandatory for both RCASPs and crypto users. Where a TIN is unavailable, the placeholder “NOTIN” is used with the Unknown attribute set to true.
TIN verification in Japan is a strategic requirement. Missing or incorrect TINs can trigger cross-border audits and reporting discrepancies, exposing RCASPs and users to regulatory penalties. Japanese RCASPs must maintain accurate TINs for all reportable accounts to meet NTA and CARF standards.
Practical Industry Solution: TaxDo
TaxDo helps Japanese RCASPs automate TIN validation and compliance:
- Global Real-Time TIN Lookup (GTL): Verifies business TINs against official tax authority databases in 130+ countries
- Global TIN Syntax Verification (GSV): Checks syntax and structure of TINs across 195+ countries, including where direct verification is unavailable
TaxDo also offers:
- Screening against 290+ global watchlists including sanctions, AML, PEPs, and wanted lists
- Automated red-flag alerts for regulatory compliance
- CRS 2.0-ready features for the 2026 rollout
Automation reduces 80–90% of manual validation work, ensures accurate TINs, and guarantees audit-ready compliance for individuals and entities. TINs are more than identifiers; they are the foundation of transparency, traceability, and regulatory confidence in Japan’s crypto reporting ecosystem.
NTA Compliance Measures and Technical Decisions
Japan’s NTA has tailored CARF implementation with precise measures.
Mandatory Due Diligence
RCASPs must collect full identity information, including name, address, jurisdiction(s) of tax residence, and TIN. Entities without tax residence are reported using their principal office address. Controlling persons of entities are also identified and reported.
Transaction Aggregation and Classification
Transactions are categorized based on type and reporting relevance:
- Exchange Transactions: Acquisitions or disposals of crypto-assets against fiat currency or other crypto-assets, including wrapping and liquid staking
- Transfers: Includes collateralized loans and crypto loans. Transfers are not treated as exchange transactions
- Retail Payment Transactions: Transfers exceeding USD 50,000 from customer to merchant
Aggregated fair market values, transaction counts, and crypto units must be reported for each category.
Data Submission and Penalties
Reports are submitted in structured XML format aligned with OECD CARF standards. Missing, incomplete, or inaccurate reports can result in fines up to ¥500,000 per violation, with higher penalties for repeated offenses. The NTA cross-verifies CARF reports with CRS 2.0 submissions and domestic filings to detect discrepancies.
International Comparisons
Japan’s CARF adoption aligns closely with Switzerland and Singapore, where crypto reporting is integrated with traditional financial reporting. By contrast, EU jurisdictions have varied timelines and scope, making Japan a regional leader in crypto transparency.
Anticipated Regulatory Developments
Over the next 3–5 years, the NTA is expected to refine CARF reporting, including granular reporting of token types and derivatives. Institutions should prepare for ongoing audits, data reconciliation, and potential expansion of CRS 2.0 to additional account types.
Conclusion
For Japanese financial institutions, CARF and CRS 2.0 are both regulatory obligations and strategic opportunities. By leveraging accurate TIN validation, transaction classification, and automated reporting solutions, institutions can achieve compliance, reduce operational risk, and gain a competitive advantage in crypto-asset services.
Japan’s approach demonstrates how a tailored, data-driven, and technologically supported framework can meet international standards while safeguarding domestic tax compliance.