Japanese Government Approves Tax Reform to Eliminate Unrealized Gains Tax
The Japanese government has given the green light to a tax reform that removes taxes on crypto holdings for corporations. This reform, which has been in discussion since December, specifically eliminates the unrealized gains tax that required companies to pay tribute based on the price change of their crypto assets each fiscal year.
Change in Tax Policy
Prior to this latest reform, the unrealized gains tax had already been eliminated for companies’ self-issued cryptocurrencies. However, with this new modification, companies can now hold crypto assets issued by third parties without being subject to the unrealized gains tax.
It is important to note, though, that cryptocurrency sales and purchases will still be subject to taxation. This decision goes against the request made by the Japan Crypto Asset Business Association to eliminate taxes on crypto exchanges.
Local media sources predict that this tax reform will result in a significant reduction in tax-derived income by June 2024, marking the largest decrease since 1989.
Encouraging Corporate Crypto Holdings
The purpose of this reform is to make it easier for corporations to incorporate cryptocurrency into their treasury without facing taxes merely for holding it. Previously, Japan was one of the few countries implementing this unrealized crypto gains tax, leading companies to store their assets in other countries.
While the approval of this tax reform is a significant step, it still needs to be presented to the Diet and gain approval from both houses before becoming official.
Hot Take: Japan Eases Tax Burden for Corporations
The Japanese government’s decision to remove the unrealized gains tax for corporations is a significant move that encourages greater crypto adoption among businesses in the country. By eliminating this tax, companies can now hold crypto assets more consistently and consider them as part of their treasury. This reform is expected to contribute to a reduction in overall tax-derived income, signaling the government’s support for the crypto industry. While the reform still needs to pass through the necessary legislative steps, this development is a positive indication of Japan’s progressive stance towards cryptocurrencies.
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