Japan’s financial regulator proposes tax reforms for cryptos

ambcrypto.com:

The Financial Services Agency, Japan’s financial regulator, has formally proposed to ease the corporate tax burden on crypto-assets.  The move resonates with Prime Minister Fumio Kishida’s recent efforts to stimulate the country’s economy. 

According to the regulator’s annual tax-code change request filing, corporate entities shouldn’t have to pay taxes on paper gains from crypto held by them. It is unclear at this time whether the tax break will apply to crypto-investments other than tokens.

PM Kishida’s stance on crypto has been rather warm. Earlier this year, PM Kishida addressed the Japanese parliament and spoke in favor of the crypto-industry.

“We are confident that incorporating new digital services such as the metaverse and NFTs will lead to economic growth for Japan. As we enter the Web3 era, I feel strongly that we must resolutely promote this environment from a political standpoint.”

As per the current tax laws, all crypto-related income is classified as miscellaneous income on tax declarations. Investors and the opposition have repeatedly called for a system where earnings are taxed at a flat rate, similar to capital gains tax. In simple words, levy tax only when profits are realized, not as per the growing value of crypto-assets.

The idea is that tax breaks to individual investors will encourage them to invest in the space. Japanese people hold $14.5 trillion financial assets in cash and deposits. Theoretically, the industry should see an influx of a whopping $70 billion if the Japanese people were to spend as little as 0.5% of their savings.

It is important to note that this is just a proposal by the Financial Services Agency and is not binding in any way. To get accepted, the proposal will have to go through a