The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA) have published a tax reform request for 2023. The request calls for separate taxation of crypto at a rate of 20%, among other things.
The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA) have together released a tax reform request for crypto assets. The Fiscal 2023 Tax Reform Request speaks about several issues, which the two groups see as an obstacle to the growth of the industry.
Those issues include the need to facilitate tax filings, a lack of consistency within the system, comparison with overseas crypto asset tax systems, and the importance of crypto assets in Japan’s web3 strategy. The latter seemed to be a key point in the tax reform request, with Gaku Saito, Chairman of the Tax System Study Group, saying,
“If the Japanese government makes Web 3.0 a national strategy, the frequency with which the public will come into contact with crypto-assets will inevitably increase dramatically… making it easier to hold will lead to the spread of Web 3.0 and contribute to the development of the market.”
The request calls for separate taxation of crypto at a rate of 20%, with a loss that can be carried forward from the income amount related to crypto assets for three years from the following year. This would also apply to derivative transactions.
Let the industry flourish
Crypto advocacy groups in Japan have been working hard lately to ensure that the crypto industry can flourish. These groups recently petitioned the government to relax corporate tax regulations, fearing that it would lead to an exodus of talent. The groups also want to reduce the present rate of taxation on individual investors from up to 55% to 30%.
Existing financial institutions are also beginning to take note of crypto. In July 2022, it was revealed that Japanese trust banks could get the green light for crypto custody, as the FSA is aiming to strengthen investor protection by deregulating trust banks.
Crypto tax being mulled over everywhere
Many countries are wondering how to go about the issue of taxing the crypto asset class. Notably, South Korea delayed its crypto tax plans again, pushing it back to 2025. Other countries like India have imposed harsh tax rules that have caused trading volumes to plummet.
Investors will have to deal with crypto taxation soon or later, as the asset class becomes more widely adopted. This along with general regulation will bring some difficulties in the short term but will legitimize the market.