Japan is planning to end sales-tax collection on digital currency purchases in the spring, which would not only reduce costs for buyers but also relieve cryptocurrency exchange operators of the administrative tax burden, Nikkei Asian Review reported.

Among the Group of Seven leading industries economies, Japan is the only country that levies tax the purchase of bitcoin. Currently, users have to pay 8 percent consumption tax in Japan to buy bitcoins at exchanges, in addition to other fees. The end of the sales tax would likely boost the growth of bitcoin and other digital currencies as alternatives to traditional currency.

"Administrative work will be reduced substantially," an official of a major bitcoin exchange operator said.

The Financial Services Agency (FSA) sought clarification in the summer on the nature of digital currencies for deciding whether these purchases should be taxed. According to Nikkei Asian Review, discussions between the Finance Ministry and the FSA are expected to lead to a formal decision after talks by a ruling-coalition tax panel at the end of the year.

Earlier this year, Japan's cabinet approved new regulations relating to cryptocurrencies, which recognize digital currency such as bitcoin as a legal form of payment fulfilling the functions of currency. In May, the Diet in Japan (the legislature that is composed of the Lower and the Upper Houses) approved a bill to regulate operators of virtual currency exchanges in the country, in order to help ensure better protection of users.

According to ResuPress, a Tokyo-based bitcoin exchange operator, nearly 2,500 stores across Japan accept bitcoin as a means of payment for shopping and dining as of September. ResuPress has plans to allow users pay electricity bills with bitcoin starting as early as this year.

Bitcoin is the most widely used cryptocurrency across the globe and currently BTC/USD is trading at 637 levels, at press time.