Japanese Businesses Call for Crypto Tax Reforms
Japan’s major businesses have urged the government to implement crypto tax reforms as the country embraces Web3 and cryptocurrencies. The Japan Association of New Economy (JANE) has submitted a tax reform proposal to Tokyo, requesting a reduction in tax rates in 2024 to stimulate growth and increase tax revenue. JANE specifically mentions crypto-related taxes and the growth of Web3. The current crypto tax system is pushing promising Web3 companies to leave the country, warns JANE, emphasizing the urgency of taking measures to prevent Japan from falling behind in the Web3 sector. Prime Minister Fumio Kishida has also acknowledged NFTs and Web3 as potential economic growth engines.
JANE’s Push for Reform Supported by Big Businesses
JANE is supported by prominent Japanese companies such as Microsoft Japan, Japan Post, Nippon Gas, Matsui Securities, LINE Yahoo, and the Seiko Group. Hiroshi Mikitani, CEO of Rakuten, serves as the Chairman of JANE. These calls for tax reform echo similar sentiments expressed by leaders in the IT sector and opposition parties. While the government has shown willingness to reform crypto tax laws for companies, some want individual crypto holders to be relieved of their tax burden as well.
Tax Burden on Crypto Holders
Currently, most firms with crypto holdings are required to pay taxes on unrealized gains at the end of each fiscal year, regardless of whether they trade these coins for fiat currency. In contrast, other countries only tax crypto profits after coins have been converted into fiat. JANE urges Tokyo to simplify the tax process for individual crypto holders and disregard the market value of cryptoassets in asset declarations. They also propose carrying forward traders’ losses and deducting them from income declarations. JANE further recommends creating a separate self-assessment taxation system for derivatives-related transactions.
Government Consideration and Conclusion
The ruling Liberal Democratic Party’s Web3 taskforce and crypto exchange groups have previously made similar suggestions. The cabinet is expected to discuss tax reform, including crypto tax, at a meeting in December. With the increasing recognition of the potential of Web3 and cryptocurrencies, Japan’s government faces the challenge of implementing tax reforms that foster growth, encourage innovation, and position the country as a leader in the Web3 sector.
Hot Take: Japan’s Crypto Tax Reforms Are Crucial for Web3 Growth
Japan’s major businesses and organizations like JANE are putting pressure on the government to reform crypto tax laws. The current tax system is driving promising Web3 companies away from Japan, threatening the country’s position in the emerging sector. By reducing tax rates and simplifying the process for individual crypto holders, Japan can encourage growth, attract investment, and support the development of a thriving token-powered economy. As Prime Minister Fumio Kishida recognizes the potential of NFTs and Web3 as economic drivers, it is essential for Japan to embrace these opportunities by enacting progressive crypto tax reforms. By doing so, Japan can position itself as a global leader in the Web3 revolution.
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