The Japanese Government Approves Amendment to Taxation of Companies Holding Third-Party-Issued Cryptocurrencies
The Japanese government has given its approval for an amendment to the taxation of companies holding third-party-issued cryptocurrencies as part of its fiscal 2024 tax reform plan. This change means that these companies will no longer be subject to the year-end mark-to-market valuation tax.
Shifting Policy for Corporations Holding Third-Party-Issued Cryptocurrencies
Prior to this amendment, corporations holding third-party-issued cryptocurrencies were required to record profits or losses based on the difference between market value and book value at the end of the fiscal year. However, under the new reform, assets assumed to be held continuously will be exempted from this mark-to-market valuation. This means that companies will now only be taxed on profits generated from the sale of digital currencies and tokens.
Efforts to Boost Liquidity and Foster Growth in Japan’s Crypto Market
Lawmakers in Japan are considering a proposal to exempt corporations from taxes on unrealized crypto gains. This move is seen as an attempt to inject more liquidity into the market and align Japan with other Asian regions that are becoming crypto hubs. The amendment was prompted by a request from the Japan Crypto Asset Business Association (JCBA) for tax reform, with the aim of supporting local startups utilizing blockchain technology and attracting international projects.
Next Steps for Approval
The proposed amendment will be presented at the regular session of the Diet in January, where it will need approval from both the House of Representatives and the House of Councilors.
Hot Take: Promoting Growth and Competitiveness in Japan’s Crypto Industry
The Japanese government’s approval of an amendment to taxation rules for companies holding third-party-issued cryptocurrencies reflects its commitment to fostering growth and competitiveness in the country’s crypto industry. By eliminating the year-end mark-to-market valuation tax, companies will have more flexibility and reduced financial burdens. This move also aligns Japan with other Asian regions that are actively supporting and attracting crypto-related businesses. With the proposed amendment set to be presented for approval next year, Japan aims to create a favorable environment for startups and international projects utilizing blockchain technology.
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