Japan Edging Toward Crypto Tax Reform

cryptonews.com:

Japan is moving toward crypto tax reforms, with the nation’s top financial regulator set to change the way it taxes domestic crypto firms.

Per the Japanese media outlet CoinPost and an official Financial Services Agency (FSA) release, the regulator has submitted legislation-change requests to the government.

The FSA wants to modify its crypto corporate tax system to scrap the current “unrealized gains” system for domestic firms.

Under the current Japanese legal system, if a company holds cryptoassets, it must pay tax on unrealized gains (increases in their coins’ value) at the end of each fiscal year.

In other nations, firms only need to pay tax on crypto they sell or swap for fiat.

The media outlet wrote:

“The rule has long been criticized for placing a burden on companies and hindering innovation in the cryptoasset and blockchain sectors.”

The FSA document notes that the Ministry of Economy, Trade, and Industry has also signed off on the reform.

The FSA says that it plans to ask Tokyo to create a legal amendment to reflect its wishes.

Most lawmakers are unlikely to raise any objections to these plans, with the government typically following the lead of the FSA on crypto-related policy matters.

The Japan Blockchain Association (JBA), a major crypto industry group, has also asked the FSA to ensure the tax reforms are also extended to cryptoassets held by third parties.

Sota Watanabe, CEO of Startale, took to X (Twitter), to echo the JBA’s sentiments, and warned of a “crisis” in the domestic crypto industry.

He wrote:

“It’s really important to make these reforms this year. So far, we have seen an outflow of startups overseas. […] I have a feeling that if we do not, Japanese [...] companies will leave one after another next year. I