Advocates of the crypto industry in Japan are urging the government to make significant changes to the national tax regime for digital assets. The Japan Blockchain Association (JBA), a prominent non-governmental lobbying group, has officially requested the government’s attention to address three key areas of concern in easing the fiscal burden on crypto holders.
Published on the association’s website on July 28, the request identifies the taxation of crypto assets as a major obstacle for Web3 businesses in Japan and a significant deterrent for citizens to actively own and utilize digital assets. The JBA’s proposed three major changes aim to foster a more favorable environment for the digital economy.
Firstly, the association is calling for the elimination of the year-end unrealized gains tax on corporations holding crypto assets. Unrealized gains refer to profits that exist only on paper and have not yet been realized through transactions. The JBA seeks to remove taxes on unrealized gains in third-party-issued tokens. This move comes after Japan’s National Tax Agency previously exempted local firms from taxation on year-end unrealized gains from cryptocurrencies they had issued.
The second request centers on the taxation method for personal crypto asset trading profits. The JBA recommends shifting from the current comprehensive taxation system to self-assessment separate taxation, with a uniform tax rate of 20%. Moreover, the proposal introduces a three-year term for deducting losses resulting from the depreciation of digital asset values.
Thirdly, the JBA is urging the government to eliminate income tax on profits generated each time an individual exchanges crypto assets. According to the association, the borderless Web3 era is likely to witness the rise of crypto asset exchanges as the mainstream economic zone. However, due to the wide array of transactions and the diverse types of crypto assets being exchanged, calculating taxes becomes increasingly complex.
Japanese Prime Minister Affirms Commitment to Web3 Industry
In a bid to drive technological innovation and embrace the potential of the Web3 industry, Japanese Prime Minister Fumio Kishida reiterates his nation’s dedication to nurturing this transformative sector. Recognizing Web3’s capability to revolutionize the internet and spark societal progress, the Prime Minister’s stance underscores Japan’s determination to be at the forefront of the digital revolution.
During the same day, Binance, one of the world’s leading cryptocurrency exchanges, made a noteworthy announcement regarding its expansion into the Japanese market. CEO Changpeng Zhao unveiled plans to introduce Binance’s comprehensive services on a new Japanese platform, slated for launch in August.
The move comes at a time when the cryptocurrency space is witnessing substantial growth and global recognition. Japan’s proactiveness in fostering the Web3 industry could potentially open new doors for technological advancements and financial inclusion.