The proposal calls for a 20% tax on crypto earnings, and an exemption from any tax on crypto gains. Losses can be carried forward up to three years.
The Japan Crypto-Asset Business Association and Japan Crypto-Asset Exchange Association (JVCEA), two of the most prominent crypto advocacy groups, released a tax reform proposal that calls for lowering the taxes on individual crypto-earnings investors.
Fiscal 2023 tax reform requests addressed key issues that advocacy groups consider to be obstacles to crypto adoption in Japan. The proposal focused on improving the tax filing environment for individuals, the importance and comparison of overseas crypto asset tax systems.
The proposal calls for an additional 20% tax on individual crypto investors, with provisions for carrying forward losses for three consecutive years. The proposal calls for the same tax structure be applied to crypto derivatives markets.
For crypto investors in Japan, who are currently subject to up to 55% tax on their crypto investments, the 20% separate tax on crypto earnings and an exemption on unrealized profits would be a huge relief.
This tax reform proposal is just one week after Cointelegraph published an internal memo regarding crypto tax reforms that were to be submitted to Japan’s Financial Services Agency (FSA).
Japanese crypto groups have worked hard to promote the cryptocurrency industry in Japan, with a special focus on tax reforms. According to these crypto lobby groups, a high tax rate would make digital assets difficult to be held in Japan by individuals and businesses as compared to countries that are more crypto-friendly.
Many countries focused on crypto taxes this year. Some implemented high tax rates, while others delayed or abolished them due to lack of clear regulations. India imposed an additional 30% tax on crypto-gainsin April, while Thailand dropped its proposal for a 15% tax and exempted traders of 7% VAT in order to encourage adoption of crypto. South Korea delayed its proposed 20% crypto tax policy until 2025.
