The National Tax Agency in Japan has revised a law to exempt token issuers from paying corporate taxes on unrealized cryptocurrency gains. This change is intended to reduce the burden on crypto token issuers and create a more favorable business environment. Under the new rules, token issuers are exempt from corporate tax if the tokens are continuously held since issuance and subject to transfer restrictions. This revision was approved by Japan’s Liberal Democratic Party’s tax committee in December 2022 and was included in the ruling party’s tax reform outline for 2023. Previously, token issuers had to pay a 30% tax on unrealized gains, leading to an exodus of crypto founders from Japan. The relaxation of corporate taxes is seen as a positive step in attracting and retaining crypto firms in Japan.
While the revision of tax laws provides relief for token issuers, it’s important to note that crypto firms are still subject to taxation on paper gains for holding tokens issued by other companies. The Japanese crypto industry has been undergoing significant changes, including stricter AML measures and restrictions on stablecoin issuance by non-banking institutions. Despite these changes, Japan remains a popular destination for crypto businesses, although other countries like Hong Kong and Singapore have emerged as friendlier jurisdictions for the industry. In contrast, the crypto industry in the United States continues to face regulatory scrutiny.
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