The Japan Blockchain Association (JBA) has reportedly requested Prime Minister Fumio Kishida to revise the nation’s tax system concerning crypto assets.
The JBA has put forward three main changes to promote the expansion of the crypto industry and make it more accessible to individuals.
Top of the list, the association recommends doing away with year-end unrealized gains taxation on tokens issued by third parties.
The lobby group also wants the JBA to bring in separate taxation for individual crypto asset transactions and set a consistent % tax rate of 20%.
JBA further proposes eliminating income tax on earnings from crypto asset exchanges.
In their assessment, accepting these reforms would create a favorable environment for businesses venturing into web3 and simplify crypto asset ownership and usage for the general public.
The JBA’s move aligns with an increasing interest from crypto firms from across the globe. Binance, the largest crypto exchange by trading volume, has already expressed interest in expanding its presence in Japan.
Overall, the Japanese government is receptive to crypto and blockchain. Measures such as establishing a dedicated unit for crypto regulation, lenient guidelines for crypto exchanges, and plans to support blockchain development indicate their increasing openness to these innovations.
Therefore, JBA’s proposal for tax reforms further reinforces this trend, potentially making Japan an attractive destination for crypto firms and investors.
Japan’s taxation of crypto assets is relatively complex, treating them as assets for tax purposes. Any profits or losses from crypto asset sales or exchanges are subject to capital gains tax.
Currently, Bitcoin is considered a commodity in the United States, and any capital gains recorded are taxed.
The SEC has listed several assets, including Cardano (ADA), as examples of unregistered securities in their lawsuit against Coinbase and Binance. However, representatives from both platforms have denied these allegations.
The European Parliament approved the Markets in Crypto-Assets (MiCA) regulation in H1 2023 and is scheduled to take effect in 2024. MiCA intends to create a complete regulatory structure for crypto assets in the EU.