The Japan Blockchain Association (JBA) is actively making substantial efforts to revamp the crypto asset tax system in Japan with the goal of nurturing a more conducive environment for the growing Web3 industry. Yuzo Kano, the representative director of bitFlyer Inc. and the JBA, has taken the initiative to submit a comprehensive request to the government concerning this issue.
One of the primary requests put forth by the JBA is the elimination of the year-end unrealized gain taxation on third-party issued tokens. While Japan’s National Tax Agency already amended some corporate tax rules to exempt the mark-to-market valuation of a company’s crypto assets.
This request seeks to abolish the year-end unrealized profit tax on tokens issued by third parties,thereby removing a considerable obstacle for domestic companies venturing into the Web3 industry.
Additionally, the JBA advocates for a revision in the taxation approach for individual crypto-asset transactions. They propose implementing a separate self-assessment taxation system, featuring a uniform tax rate of 20%.
The current tax system has discouraged some potential investors, but the JBA’s survey indicates that many would be willing to increase their investment if this taxation method were adopted.
Elimination Of Income Tax On Crypto Exchanges
The JBA seeks the elimination of income taxation on profits generated from exchanging crypto assets. This proposal aims to facilitate seamless operations for various use cases, including DeFi and NFT markets, ultimately leading to increased convenience and accessibility of crypto assets.
The proposed tax reforms align with the JBA’s vision for Japan to be recognized internationally as a Web3-advanced country. They believe that embracing these changes will lead to the growth of the Web3 economic zone and foster innovation in the country’s economy.
Critics underscore the importance of widespread support and understanding of crypto assets in Japan for the successful implementation of tax reform. Gaku Saito, CEO of pafin Co., Ltd. and chair of JCBA’s tax review committee, highlights the significance of generating social momentum and enhancing people’s lives to accomplish these reforms.
The Japan Crypto-Asset Business Association (JCBA) and JBA have jointly requested tax reform in 2022. They are currently discussing this matter with the Financial Services Agency.
Japan’s potential tax reforms have the power to elevate its global position in the realm of crypto-assets. Anticipated surges in both user engagement and investment are projected to bolster tax revenues significantly.
However, presently situated at the 15th spot in worldwide rankings, Japan aspires to emerge as a prominent player within the Web3 economy, thereby fostering robust economic growth and advancement.
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