The National Tax Agency has updated crypto tax rules, offering exemptions for firms issuing tokens.
Anime tax isn’t the only thing Japan is good at, crypto issuers will also enjoy huge tax reliefs according to new notice.
These new tax regulations are to attract crypto investors and firms to the country.
Japan grants exemption from 30% crypto tax
Japan’s National Tax Agency (NTA) has updated its corporate regulations to ensure a clear path for crypto taxation. The agency released an updated version of its crypto tax guidelines that will see token issuers no longer pay tax on unrealised gains
According to the notice released last week, crypto assets will be excluded from the company’s asset valuation based on market value if certain conditions are met. To benefit, company’s will have to hold the coins continuously after the issuance, while the crypto asset itself is subject to transfer restrictions.
Since last August, legislators in Japan have been debating new crypto tax rules that will help entice fintechs to the country. But the new rules only got approval this week.
The new rules specifically provides that firms issuing tokens are exempt from paying a set 30% corporate tax rate on their holdings.
This is contrary to the previous tax rules which required that firms pay a set 30% corporate tax rate on holdings even if they haven’t realised a profit through sale. This rule was heavily criticised as burdening crypto companies and impeding the development of blockchain technology in the country. These rules reportedly forced some Japanese crypto firms to relocate abroad.
One of these companies is Web3 infrastructure developer Stake Technologies Pte., which relocated from Japan to Singapore in 2020. CEO Sota Watanabe told Bloomberg last year that he would prefer to bring the company back to his home country should the Japanese government reform the corporation crypto tax rules.
Industry organisations in Japan have also called for other tax reforms, such as taxing cryptocurrency profits at the same rate as stocks and only taxing individuals when cryptocurrency gains are converted to fiat money.
US loss, Japan won
This revision in crypto tax laws are not accidental. They come amidst the US Securities and Exchange Commission (SEC) and other regulators tightening restrictions on the crypto industry.
SEC Chair Gary Gensler has also insisted that the crypto industry is built on “non-compliance,” just before he declared that, “we don’t need more digital currency.”
However, Japan has maintained a progressive approach towards crypto. It was one of the first countries to legalise and regulate cryptocurrencies. Earlier this month, reports circulated that the country’s largest bank may begin to issue stablecoins.
“The U.S. regulators are increasingly tightening controls, but that doesn’t mean the same things will happen in Japan,” Noriyuki Hirosue, CEO of Tokyo-based crypto exchange Bitbank, told The Japan Times.
The news of the tax reform has been met joy and enthusiasm. Sota Watanabe, who has advocated for this tax revision, commented (translation): “For the time being, people who want to do something like Astar can now do it without leaving the country. I would like to continue constructive discussions with politicians and authorities.”
Disclaimer: CryptoPlug does not recommend that any cryptocurrency should be bought, sold, or held by you. Do conduct your own due diligence and consult your financial advisor before making any investment decisions.
