The Japanese Government Approves Tax Regime Revision for Crypto
The Japanese government has given its approval to a tax regime revision that will exempt corporations from paying taxes on unrealized crypto gains if they hold the assets for a longer period of time. This move is aimed at encouraging long-term investment in cryptocurrencies. The revision, which was approved by the cabinet, will apply to companies that own cryptocurrencies issued by third parties.
Currently, third-party-issued cryptocurrencies held by corporations are considered as profits or losses based on the market value and book value difference at the end of the fiscal year. However, under the proposed revision, this mark-to-market valuation would no longer be applied if companies hold the assets for the long term. As a result, companies would only be taxed on profits generated from the sale of cryptocurrency.
The revision for the fiscal year 2024 still needs to be submitted and approved by the Lower House and the Upper House in January 2024.
Positive Impact on Web3 Business
The tax reform demonstrates the Japanese government’s support for Web3 business growth. Daiki Moriyama, director of gaming blockchain builder Oasys, stated that this reform is crucial for all Web3 business stakeholders worldwide.
Potential Change in Tax Regime
This tax regime change follows Japan’s tax agency clarifying in June that crypto issuers no longer have to pay capital gains tax on unrealized gains. Prime Minister Fumio Kishida has also expressed his dedication to creating an environment conducive to promoting web3 and harnessing its potential for social change.
Hot Take: Encouraging Long-Term Investment in Crypto
The Japanese government’s approval of a tax regime revision to exclude corporations from paying taxes on unrealized crypto gains if they hold the assets longer term is a significant step towards encouraging long-term investment in cryptocurrencies. By providing tax incentives for companies to hold onto their crypto assets, Japan is fostering an environment that supports the growth of Web3 businesses. This move not only benefits Japanese companies but also has a positive impact on Web3 business stakeholders around the world. It demonstrates Japan’s commitment to embracing the potential of cryptocurrencies and creating an environment conducive to their development.
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