An industry organization in Japan has suggested that the government should reform taxation rules for crypto assets and transactions. Its members are convinced that the current tax regulations hinder growth of the Web3 economy in the country and discourage taxpayers from holding and using cryptocurrencies.
Japan Government Asked to Amend Tax Laws for Crypto Gains and Transactions
The Japan Blockchain Association (JBA) has submitted a request to the government in Tokyo to revise the taxation regime for virtual currencies. The organization led by co-founder and CEO of Japanese crypto exchange Bitflyer, Yuzo Kano, insists that the proposed changes would allow more domestic companies to enter the Web3 sector.
The JBA is calling for a review of the taxation system for crypto assets, which it says is hindering the growth of the Web3 business in Japan, as well as for the development of an environment in which citizens can own and use digital assets, the Japanese crypto news outlet Coinpost reported Saturday.
Last month, Japan’s National Tax Agency (NTA) amended some corporate tax rules to relieve firms from the taxation of year-end unrealized gains from cryptocurrencies they have issued. The association now wants unrealized profits from tokens issued by third parties to be exempt, too, saying this burden is one of the barriers preventing entry into the Web3 market.
“If the end-of-term unrealized gain tax is abolished, companies will no longer need to sell the tokens they hold for tax purposes … Under the current tax system, selling tokens to pay taxes could cause the price of the tokens to fall, which could hinder the growth of the token-based economy,” the JBA explained.
The organization also urges for changing the taxation method for individual crypto asset transactions to separate self-assessment taxation with a flat tax rate of 20%. In addition to that, the association suggests that losses should be carried forward and deducted in the three years following the year in which they occurred, reducing the tax.
JBA quoted data from the Japan Crypto Asset Trading Association which shows that the number of people opening crypto asset trading accounts in Japan continues to grow. As of April 2023, they were approximately 6.8 million. It also noted that almost 44% of the respondents in its own survey said they would more than double their investments if they changed to separate self-assessment taxation.
The industry body also wants the Japanese government to eliminate income taxation for profits made when crypto assets are exchanged. The JBA believes these amendments would increase the number of crypto users in the country as well as the amounts invested in crypto assets, and ultimately lead to higher tax revenues for Japan.
Do you think the Japanese government will accept the JBA’s proposals for crypto tax reform? Tell us in the comments section below.
