Japan Edges Toward Corporate Crypto Tax Reform
Japan is inching closer to reforming its strict crypto tax laws for corporations – in a bid to stop an “exodus” of crypto talent and capital from flowing overseas.
Pressure to reform has mounted in recent years, with industry figures and opposition leaders alike all calling for change.
More recently, the top financial regulator, the Financial Services Agency (FSA), has signalled that it also wants to modify the restrictive laws. But a final step in this process is approval from the National Tax Agency (NTA).
But while the NTA is yet to publicly signal it will make the change, analysts believe that it is working on a tax reform bill that it hopes to unveil in parliament in the coming months.
Late last week, the NTA released a set of FAQs that address the matter of crypto taxation.
And while these did not directly make mention of any coming reform, Junya Izumi, an Associate Professor of Tax Law at the Chiba University of Commerce, pointed out on Twitter that certain pro-reform nuances were included in the NTA’s document.
For instance, the professor – a crypto tax law specialist – noted, the FAQs appear to indicate that in certain cases, coins that are “locked up” in staking contracts may not be subject to taxation.
As things stand, Japanese law states that companies must pay tax on “paper gains,” positive price changes in tokens’ worth versus fiat. For example, if a company were to hold a token whose worth increased over the course of a financial year, the firm would be liable to pay tax on that coin’s increased value. This would be the case even if the company did not sell its token for fiat.
In other nations, companies often only have to pay taxes when they sell the tokens they hold for fiat.
Many Japanese firms think this law is
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