Japan to Ease Crypto Tax Requirements for Local Firms

The Japanese government is gearing up to relax tax obligations for local cryptocurrency firms as part of its effort to stimulate growth within the domestic finance and technology sectors. Under current regulations, Japanese firms that issue crypto are subjected to a corporate tax rate of 30% on their holdings, even if no profit has been realized through sales. This has prompted numerous blockchain and crypto startups to establish operations in more tax-friendly jurisdictions in recent years.

New Tax Proposal Approved

In a meeting held by Japan’s ruling party, the Liberal Democratic Party’s (LDP) tax committee on December 15, a proposal that was initially introduced in August was approved. This proposal would eliminate the requirement for cryptocurrency companies to pay taxes on unrealized gains from tokens they have issued and held.

The adjusted crypto tax regulations are slated to be submitted to parliament in January and are expected to come into effect for the next financial year starting April 1.

Positive Reactions from Lawmakers

LDP lawmaker and member of the Web3 policy office, Akihisa Shiozaki, described the move as a significant advancement, asserting that it would facilitate operations for various companies engaging in token issuance.

This development signals that Japan remains committed to fostering and developing its crypto and Web3 sector, despite the recent fallout from the collapse of FTX.

Continued Emphasis on Digital Transformation

In October, Prime Minister Fumio Kishida stressed the importance of nonfungible tokens (NFTs), blockchain, and the metaverse in Japan’s digital transformation efforts, referencing the digitization of national identity cards as an example of innovation.

Additionally, the Japan Virtual and Crypto Assets Exchange Association announced plans to ease the stringent screening processes for listing new tokens on exchanges, a shift that Kishida had previously advocated for in June.

Private Sector Initiatives

The focus on growth has been mirrored by private sector initiatives. On December 8, banking giant Sumitomo Mitsui Financial Group (SMBC) disclosed that it is exploring use cases for soulbound tokens (SBTs). SBTs represent a concept introduced by Ethereum co-founder Vitalik Buterin regarding tokens intended to signify individuals’ digital identities.