gold coin bitcoin on a background of a flag Japan
Fast Take
Liberal Democratic Party’s Proposal
The Liberal Democratic Party, a significant political force in Japan, is pushing for immediate tax reforms in the cryptocurrency sector. They recently unveiled a strategic document, dubbed the “White Paper,” on April 12, signaling a strong push for regulatory changes.
A Step Towards Strengthening the Crypto Ecosystem
In February, the government announced plans to allow venture capital funds to invest in local cryptocurrency companies, aiming to bolster the crypto ecosystem in Japan. The web3 project team stressed the importance of a specific tax regime for crypto transactions, urging urgent reforms.
Current Taxation System
Presently, cryptocurrency traders in Japan must report their trading profits and losses as “other income” on their annual tax returns. This leads to varying tax burdens, with rates ranging from 11% for low-income individuals to over 50% for higher earners.
Calls for Change
Unlike some countries where crypto profits are taxed as capital gains, Japan has faced pressure to revise its tax policies. Prime Minister Fumio Kishida’s administration has shown support for web3 initiatives, including recent reforms benefiting companies by abolishing taxes on unrealized gains.
Path to Reform
If the Digital Society Promotion unit backs tax reforms for individual traders, the proposal will move to the party’s Political Affairs Research Council. If approved, it will become official policy, allowing lawmakers to introduce a bill in the National Diet.
Proposed Changes
The proposed reforms include separate taxation for crypto profits and the option to defer losses for up to three years. These adjustments could alleviate the burden on traders during market downturns.
Industry Reaction
The Japanese cryptocurrency industry has welcomed the news, with CEO Sota Watanabe praising the comprehensive coverage of key industry issues in the White Paper.
