Advocates of the crypto industry in Japan demand the revision of the national tax regime for digital assets.
Advocates of the crypto industry in Japan demand the revision of the national tax regime for digital assets. Japan Blockchain Association (JBA), a non-governmental lobbying group, filed an official request to the country’s government, highlighting three major steps to ease up the fiscal burden on crypto holders.
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The request was published on the Association’s website on July 28. It calls the taxation of crypto-assets the biggest barrier for web3 businesses in Japan, and a factor that prevents citizens from actively owning and using crypto-assets. Thus, the group names three major changes, that could be done to ease the pressure on the digital economy.
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The first one is the elimination of year-end unrealized gains taxation on corporations holding crypto assets. Unrealized profit refer to profits that have occurred on paper, but the relevant transactions have not been completed. The JBA seeks to abolish the taxes on unrealized gains in third-party issued tokens. In June, Japan’s National Tax Agency (NTA) has already relieved local firms from taxation of year-end unrealized gains from cryptocurrencies they have issued.
The second request deals with the taxation method for personal crypto asset trading profits. It suggests changing this method from current comprehensive taxation to self-assessment separate taxation, with a uniform tax rate of 20%. Additionally it proposes the three years term for deducting the losses from the digital assets value depreciation.
Thirdly, the JBA seeks the elimination of income tax on the profits generated each time an individual exchanges crypto assets. As the request goes:
“In the borderless web3 era, there is a high possibility that the exchange of crypto-assets will become the mainstream of the economic zone, and due to the wide variety of transactions that occur and the types of crypto-assets that are exchanged, tax calculation will be extremely difficult.”
At the end of July, Japanese Prime Minister Fumio Kishida reaffirmed the country’s commitment to fostering the Web3 industry, highlighting its potential to transform the internet and kindle social change. On the same day, Binance CEO Changpeng Zhao announced the cryptocurrency exchange would launch its services on a new Japanese platform in August 2023.
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