Media: Chinese investors used cryptocurrency to buy real estate in Japan

Tokyo’s tax office has found that Chinese investors acquired real estate in Japan worth ¥27 billion ($237 million) using cryptocurrency to evade restrictions. The The Asahi Shimbun reports, citing sources.

According to them, the agency’s attention was drawn to a photo studio catering to foreign tourists in Tokyo’s Taito Ward, whose owner was a Chinese national. Through its accounts the company moved ‘huge sums’, reflecting income of ¥10 million ($87,700) in its books.

One of them is linked to an unnamed Bitcoin exchange, the newspaper writes. Over three years the photo studio converted cryptocurrency received from three Chinese residents into yen amounting to a total of ¥27 billion. The Tokyo-based company received a portion of these funds as commissions.

According to the report, the Chinese sent instructions via the WeChat messenger. The yen was used in several real estate deals involving other investors from the PRC. The photo studio ceased operations in 2020.

Three Chinese individuals acted as intermediaries for wealthy compatriots who wanted to buy overseas real estate and circumvent the $50,000 annual capital outflow limit. Otherwise, they would have required a special permit from Chinese authorities.

“This case shows that it is necessary to cooperate with Chinese tax authorities. It is important to untangle the flow of funds, clarify issues related to such transactions, and take measures to address them”, said Nobuhiro Tsunoda, chair of Ernst & Young Tax.

The paper noted that since 2020 Japan has expanded the tax authority’s powers. Its officers have been empowered to request reports on clients from Bitcoin exchanges under certain conditions. The aim is to strengthen monitoring of those handling large volumes of digital assets and failing to reflect them properly in filings.

In October, Cardano investors in Japanwere accused of tax evasion.

In March, the Kanazawa District Court for the first time sent the Bitcoin owner to prison for tax evasion.

Earlier, the Financial Services Agency of Japan began discussing tougher rules for digital assets to protect investors.

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