Japan To Reform Crypto Corporate Tax Laws

The Japanese government has announced that it will evaluate the crypto tax rules that are applicable to corporations in the fiscal year of 2023. The Financial Services Agency and the Ministry of Economy, Trade and Industry (METI) will carry out the evaluation of how these digital asset corporations will use digital assets to boost growth. of startups

The fiscal year 2023 tax reform request has focused on resolving key issues that advocacy groups have stated are obstacles to cryptocurrency adoption in Japan. The two eminent cryptocurrency advocacy groups in Japan, the Japan Crypto Asset Business Association and the Japan Crypto Asset Exchange Association (JVCEA), released this request to reduce tax rates for investors. individuals on cryptocurrency earnings.

This proposal has been primarily aimed at addressing the need for better individual tax reporting and the general importance of digital assets in Japan’s Web3 industry. This has been part of the proposal after advocacy groups compared Japan’s digital asset tax system to that of other nations.

Changes in the crypto tax system

Tax regulators have said that the updated tax structure will take into account whether companies holding cryptocurrency assets are required to pay taxes when they generate profit from sales.

Regulators said the agencies do not want to be a hindrance to the growth of the industry as a whole or even discourage digital asset companies from working within the country.

The proposal calls for a separate 20% tax for individual investors with the option to take losses for the next three years from the following year. The proposal has also mentioned the same tax structure that will apply to the crypto derivatives market.

The separate 20% tax on digital asset gains with an exemption on unrealized gains will help become a big relief for digital asset investors in Japan.

At the moment, investors in Japan have to pay up to 55% of their investments in cryptocurrencies.

The tax reform proposal comes after the submission of the internal memorandum for digital asset tax reforms to Japan’s Financial Services Agency (FSA) was delayed. The change in the reform is to ease the tax policy of the country, so many companies were moving from Japan and operating in Singapore and the United Arab Emirates, as they have easier regulation.

Strict tax policies

At the current time, Japan imposed a 30% corporate tax on cryptocurrencies. Indeed, this has caused a brain drain from the digital asset industry in Japan.

Advocacy groups have mentioned that due to such strict policies, Japan has been causing companies to leave the country.

The reasons have been directed at the lack of consistency within the system and also at the need to establish and stabilize the Web3 industry and also create a better environment for tax returns.