Japan’s Financial Regulator Formally Proposes Crypto Tax Reduction

Japan’s Prime Minster Kishida seeks to double household wealth and support the country’s Web3-centered businesses.

Japan's Financial Services Agency May Ease Crypto Tax

In a highly anticipated move, Japan’s financial regulator has proposed reducing taxes for crypto companies and individual investors, according to a recent Bloomberg report. Additionally, Japan’s Prime Minster Kishida is seeking to double household wealth and support the country’s Web3-centered businesses.

In a bid to improve its crypto tax system, Japan’s Financial Services Agency proposed easing corporate tax rules for crypto assets as well as lighter levies for individual stock investors in support of Prime Minister Fumio Kishida’s efforts to reinvigorate the economy. 

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Furthermore, the FSA proposal also seeks to introduce lighter levies for individual stock investors. In the current tax system, individuals can have a portion of their investment gains and dividends not included in the capital-gains tax over a period of time. 

Companies should be exempted from paying taxes for paper gains on crypto coins that they hold after issuing them, the regulator proposed in its annual tax-code change request, according to the media giant. 

Currently, in Japan, profit from cryptocurrency holdings, including unrealized gains, is subject to corporate tax of about 30%, and individual crypto investors could be taxed up to 50%.

Proposal Wants Government to Set Investment Limit for Retail Investors

In favour of individual crypto investors, the Japanese regulators’ annual tax-code change request seeks to implement tax breaks. The proposal wants the government to raise the investment limit for retail investors while making the tax break system work with the Nippon Individual Savings Account, an account that is meant to help residents in Japan save money with tax-exempt benefits. 

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As recently as last month, the Japan Cryptoasset Business Association and the Japan Virtual and Crypto assets Exchange Association, two of the country’s top crypto lobbying organizations, submitted a proposal to the Financial Services Agency that aims to lower tax regulations and establish a better environment for domestic digital asset businesses.

On the Flipside

  • It has been observed that corporate crypto tax in Japan has been a source of contention between regulators and players. In many cases, high taxes have been cited as the reason behind new projects migrating to friendly jurisdictions like Singapore.

Why You Should Care

Japan’s President Mikitani has been stressing the need to review the tax system, as the government intends to avoid hindering the growth of startups and prevent outflow to overseas. 

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
Akriti Seth

Akriti is a Zurich-based reporter, focused on the political, regulatory, and legislative developments around crypto. She is a business journalist with over six years of experience working as a correspondent for organizations like Channel NewsAsia and Bloomberg TV India. In that time, Akriti has covered news in the finance, pharma, and state sectors.