The Japanese government has given its approval to revised taxation laws that provide favorable conditions for companies holding cryptocurrencies.
The major change involves the exclusion of year-end market value assessment taxation for corporations holding third-party issued cryptocurrency.
Japan Reduces Crypto Tax Bill For Companies
According to a recent report, as a result of Japan’s crypto tax reform, there will be a change in the scope of the year-end market value assessment in the Corporate Tax Law.
Previously, gains or losses related to crypto held by companies were based on the variance between market value and book value at the end of the fiscal year.
However, in Japan, the fiscal year runs from 1 April to 31 March.
Meanwhile, the revised rule eliminates the application of this market value assessment in cases of holding crypto continuously.
Meanwhile, corporations will now only be subject to taxation on profits resulting from the sale of crypto. This aligns with the taxation approach applied to individual investors.
Read more: How to Reduce Your Crypto Tax Liability: A Comprehensive Guide
This is intended to reduce the tax burden on corporations engaged in the holding and operation of crypto.
The tax reform reflects certain requests made in the 2024 tax reform submitted by the Japan Cryptocurrency Business Association (JCBA).
The revision is anticipated to stimulate domestic entrepreneurship.
This comes amid BeInCrypto recently reporting that Slovakia has significantly reduced its crypto taxes from 19%-25% to 7%, potentially costing the government millions.
Japan’s Ongoing Efforts to Reduce Taxation
In the prior year’s tax reform, only crypto issued by corporations themselves were exempt from market value assessment taxation.
However, there was a growing demand for similar treatment for those issued by other companies.
Additionally, the fiscal year 2024 tax reform outline includes plans to reduce income tax and resident tax by 40,000 yen per person from June 2024 onwards.
The estimated reduction in revenue, totaling 3.8743 trillion yen for both national and local governments, marks the third-largest scale since the fiscal year 1989.
The proposed bill is scheduled for submission to the regular session of the National Diet in January next year. It requires approval from both the House of Representatives and the House of Councillors.
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