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You might also be interested in: https://www.nytimes.com/2017/06/14/business/japan-gold-smuggling-crime-rates.html https://www.nytimes.com/2017/06/14/business/j

You might also be interested in: https://www.nytimes.com/2017/06/14/business/japan-gold-smuggling-crime-rates.html https://www.nytimes.com/2017/06/14/business/japan-gold-smugg... Gold smuggling, which Japan is getting mildly more serious about combatting, is largely just about tax fraud. Japan has a VAT-style consumption tax. When you buy gold you pay the seller 8% of the value of the gold you are buying. This includes if you buy it from e.g. a natural person. When you legally import gold, you pay the same rate as a duty. So in the ordinary course of business, you import the gold (pay 8%), you sell the gold onto someone (who pays you the 8% back and holds that 8% on their own books), who sells it onto someone (who pays them the 8% back and holds the 8% back), etc ad infinitum. All gold in Japan essentially has an 8% tax asset virtually attached to it. So if you can create gold in Japan which came "from nowhere", you get instant 8% of the gold created in profit, by selling it at market. Presto: join the ranks of smugglers by the simple expedient of buying $10k of gold abroad and selling it when you get home, collecting an easy $800. $10k of gold is smaller and lighter than a Gameboy, and if you can bring a Gameboy into the country, you could bring in $10k of gold instead. This is lucrative, simple, socially viral ("Did you hear that you can fly for free? All you need to do is buy gold abroad. It's always more expensive in Japan; taxes or some nonsense."), and never requires you to deal with the criminal element, other than yourself. Both transactions are with well-regulated gold firms in well-lighted commercial districts and don't strike either shop as being at all out of the ordinary. So the government is trying to be very splashy about educating people that a) this is, factually, smuggling and b) the kid gloves are coming off... at some point in the ill-defined future.

IkmoIkmo 9y ago
Hah, really interesting. I wonder how they do the money-laundering though. Perhaps they never do try to get the cash back into the legal system, but we've heard of people profiting >1m, meaning they've done 10m in cash transactions. At some point you want to use it, and need to account for it. Not sure what it's like in Japan, but typically notaries or even expensive car dealers will not just let you bring a bag of cash to buy an asset.
- patio11 9y ago
  Japan has AML laws but, broadly, has a much higher tolerance for high-value cash transactions than e.g. the US does, particularly if you read as obviously socially established. If you're in possession of $50k cash in the US, presumption is that you're crooked in at least one way. If you bring $800k cash to a real estate closing in Japan, presumption is heavily in favor of "Ahh, a traditionalist." (This assumes, regretfully but accurately, that you don't have a complicating factor like being a foreigner while doing it...)
euroclydon 9y ago
How is it a “tax” if the 8% goes to the seller and not the government?
- patio11 9y ago
  Same as all VAT taxes, right. My business buys a mouse; I pay 8% to the store selling the mouse. My business sells a $FOO; my customer pays 8% to me. I file a tax return, remitting the government 8% of a $FOO less 8% of the mouse.
  - euroclydon 9y ago
    > So if you can create gold in Japan which came "from nowhere", you get instant 8% of the gold created in profit, by selling it at market. And then, since you're a criminal, you simply don't file a tax return?

IkmoIkmo 9y ago

Hah, really interesting. I wonder how they do the money-laundering though. Perhaps they never do try to get the cash back into the legal system, but we've heard of people profiting >1m, meaning they've done 10m in cash transactions. At some point you want to use it, and need to account for it. Not sure what it's like in Japan, but typically notaries or even expensive car dealers will not just let you bring a bag of cash to buy an asset.

patio11 9y ago
Japan has AML laws but, broadly, has a much higher tolerance for high-value cash transactions than e.g. the US does, particularly if you read as obviously socially established. If you're in possession of $50k cash in the US, presumption is that you're crooked in at least one way. If you bring $800k cash to a real estate closing in Japan, presumption is heavily in favor of "Ahh, a traditionalist." (This assumes, regretfully but accurately, that you don't have a complicating factor like being a foreigner while doing it...)

euroclydon 9y ago

How is it a “tax” if the 8% goes to the seller and not the government?

patio11 9y ago
Same as all VAT taxes, right. My business buys a mouse; I pay 8% to the store selling the mouse. My business sells a $FOO; my customer pays 8% to me. I file a tax return, remitting the government 8% of a $FOO less 8% of the mouse.
- euroclydon 9y ago
  > So if you can create gold in Japan which came "from nowhere", you get instant 8% of the gold created in profit, by selling it at market. And then, since you're a criminal, you simply don't file a tax return?