Japan considers cutting taxes to attract cryptocurrency startups to the country
The government of Japan recently announced that it is ready to review the country’s existing cryptocurrency corporate tax rates with a view to attracting new emerging companies to the country.
According to the statement, Japan’s Financial Services Agency (FSA) and the Ministry of Economy, Commerce and Industry are considering a proposed tax reform by 2023.
This tax reform could bring benefits to startups such as tax exemption on unrealized profits.
Japan’s current legislation
Current Japanese tax legislation indicates that unrealized capital gains in virtual currencies are reported as income at the end of each tax year, giving rise to tax liability.
With this legislation, profits made in cryptocurrencies, both from individuals and companies, in excess of 200,000 Japanese yen (BRL 7385.60) in a given fiscal year are classified as “miscellaneous income”.
Miscellaneous income is taxed at a rate ranging from 15% to 55%, with the local resident tax rate included. In comparison, profits made from trading stocks and Forex are only subject to a 20% tax at the highest levels.
For this reason, the possibility of some changes in tax legislation in the cryptocurrency niche is closely watched by many investors and blockchain companies established in the Asian country.
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