Originally published on: September 04, 2024
In a bid to boost the crypto industry, Japan’s Financial Services Agency (FSA) has proposed significant changes to the tax code for 2025, with a focus on lowering taxes for crypto assets. The FSA’s request for tax reform highlights the importance of treating crypto assets as traditional financial assets, making them more attractive for public investment.
Currently, profits from crypto transactions in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%. This is significantly higher than the tax rate for stock trading profits, which stands at a maximum of 20%. Corporate crypto holders face a flat 30% tax rate on their holdings, regardless of whether they have made a profit.
To enact these changes, government ministries will need to submit reform requests to the ruling party, the tax system research committee, and the national legislature for approval. Only after being approved by both houses of the Japanese government will the tax reform be passed into law.
Advocates of the crypto industry in Japan, such as the Japan Blockchain Association, have long been pushing for a revision of the national tax regime for digital assets. Calls for a lower tax rate on crypto assets have been ongoing, with proposals for a flat 20% tax rate and a three-year loss carryover deduction.
Despite these efforts, policy changes have not yet been implemented. However, with continued pressure and proposals from industry advocates, the future may hold a more favorable tax environment for crypto assets in Japan. Stay tuned for further updates on this developing story.