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Japan's finance regulator proposes lower crypto taxes in 2025

GrafaGrafa2024/09/05 05:05
By:Isaac Francis

Japan’s Financial Services Agency (FSA) has announced a proposal for an overhaul of the nation’s tax code for the 2025 fiscal year, which could result in a lower tax rate for crypto assets.

The FSA’s request for tax reform, released on August 30, suggests that cryptocurrencies be treated similarly to traditional financial assets, allowing them to become more accessible investment options for the public.

The FSA emphasised that crypto assets should be viewed as investment targets, stating, “Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public.”

Currently, crypto profits in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%, depending on the taxpayer's income bracket.

Profits over 200,000 yen (about $1,377) can attract the highest tax rate of 55%.

By contrast, gains from stock trading are taxed at a flat rate of 20%.

For corporate crypto holders, the current tax system requires them to pay a flat 30% tax on their holdings at the end of the financial year, even if they have not sold any assets or realised a profit.

This policy has been a point of contention for the industry, prompting calls for a more favorable tax regime.

The Japan Blockchain Association, a pro-crypto lobbying group, has been advocating for lower taxes on digital assets.

In 2023, the group requested the government reduce the tax rate to a flat 20% for crypto and introduce a three-year loss carryover deduction to support the industry’s growth.

On July 19, they reiterated their request for the 2025 financial year as part of ongoing efforts to promote a more supportive environment for the crypto sector in Japan.

Tax reform requests from government ministries, including the FSA, are first submitted to the ruling party, which then reviews them through a tax system research committee.

For these proposals to become law, they must be approved by both houses of Japan’s government: the House of Representatives and the House of Councilors.

While crypto advocates are hopeful, their requests for tax reforms have not yet led to any concrete policy changes.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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