Blockchain & Crypto

Japan considers tax reforms to encourage crypto startups

Reforms in the Japanese tax system would boost domestic innovation in the virtual currency sector

Japan tax reforms crypto

Japan considers tax reforms to encourage crypto startups. Source: pixabay.com

According to the Japanese news outlet Yomiuri, Japan’s Financial Services Agency is considering changes to the virtual currency taxation system for corporate entities within the 2023 tax reform. The current tax system stifles domestic innovation and forces crypto startups out of the country. 

Therefore, the proposed amends include removing capital gain liabilities for undisposed corporate crypto assets. Besides, the government considers changing the classification of virtual assets so the maximum capital gains tax applicable is reduced to 20% from 55%. 

Under Japan’s current legislation, unrealized capital gains on virtual currencies are recognized as income at the end of each fiscal year and incur income tax liabilities. In addition, both individual and corporate crypto earnings of over 200,000 JPY ($1,463) in any given fiscal year are classified as “miscellaneous income”. It is taxed at a variable rate of 15%-55%, with the local inhabitant’s tax rate included. All crypto-income generating activities, such as DeFi lending, Bitcoin mining or crypto trading are taxed this way. On the other hand, profits earned from stock and forex trading are subject to a tax of under 20%.

Furthermore, foreign permanent residents of Japan are facing nominal rates of over 55%. It is also not possible to carry forward any capital losses resulting from crypto operations.

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Nina Bobro

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https://payspacemagazine.com/

Nina is passionate about financial technologies and environmental issues, reporting on the industry news and the most exciting projects that build their offerings around the intersection of fintech and sustainability.