David - Cryptocurrency Enthusiast
Prominent supporters of the crypto industry in Japan are calling on the government to reassess the tax framework concerning digital assets. The Japan Blockchain Association (JBA), a non-governmental lobbying group, has formally presented a request for three significant amendments aimed at easing the tax responsibilities of crypto holders and cultivating the expansion of Web3 enterprises within the nation.
Published on July 28, the JBA's request highlights the taxation of crypto assets as a significant barrier for the cryptocurrency investment economy in Japan. To address this concern, the association proposes three key revisions.
The first change calls for the elimination of the year-end unrealized gains tax on corporations holding crypto assets. The term "unrealized gains" refers to paper profits that have not yet been realized through completed transactions. The JBA aims to exempt third-party-issued tokens from taxes on unrealized gains. Significantly, it is worth noting that Japan's National Tax Agency had previously exempted local companies from taxation on year-end unrealized gains originating from cryptocurrencies they had issued back in June.
The second request involves altering the taxation method for personal crypto asset trading profits. The JBA suggests moving from the current comprehensive taxation system to self-assessment separate taxation, with a uniform tax rate of 20%. Additionally, the proposal includes a three-year term for deducting losses resulting from the depreciation of digital asset values.
The third major change sought by the JBA is the elimination of income tax on profits made through individual cryptocurrency exchange platforms. Considering the borderless nature of the Web3 era, where crypto asset exchanges are becoming increasingly mainstream, the association emphasizes the complexity of tax calculations due to the variety of transactions and types of crypto assets involved.
Prime Minister Fumio Kishida recently reaffirmed Japan's commitment to nurturing the Web3 industry, recognizing its potential to revolutionize the internet and drive social change. In alignment with this vision, cryptocurrency exchange Binance has announced plans to launch its services on a new Japanese platform in August.
As the call for crypto tax revisions gains momentum, the Japan Blockchain Association's proposal aims to create a more conducive environment for crypto asset management and investment. With the potential for transformative changes in the secure cryptocurrency landscape, striking the right balance between taxation and industry growth remains a top priority for Japan's policymakers and stakeholders.