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Japan Blockchain Association urges the government to revise crypto taxation rules

Japan Blockchain Association calls for crypto tax amendments to drive web3 growth and encourage digital asset adoption to boost the blockchain industry

Shashank Bhardwaj
Published: Aug 1, 2023 05:18:59 PM IST

Japan Blockchain Association urges the government to revise crypto taxation rulesImage: Shutterstock

The Japan Blockchain Association (JBA) is urging the government to reform taxation rules for crypto assets and transactions to boost the growth of the web3 economy in Japan. Led by Yuzo Kano, CEO of Bitflyer, the JBA argues that the current tax regulations hinder the development of the digital asset industry in the country and discourage people from using crypto.

The JBA recently submitted an official request to the Japanese government, outlining three key areas where tax reforms are needed to facilitate easier crypto asset investments in the country.

The first demand is eliminating year-end unrealised gains taxes on corporations holding crypto assets. This would relieve companies from paying taxes on profits recorded on paper, which they have yet to realise through actual transactions. The JBA also advocates extending this exemption to include unrealised profits from third-party-issued tokens. In June, the National Tax Agency in Japan already exempted local firms from such taxes for crypto assets they had issued.

The second point of emphasis in the JBA's request is changing the tax method for individual crypto-asset transactions. Currently subject to comprehensive taxation, the JBA proposes a shift to self-assessment separate taxation with a flat tax rate of 20%. Additionally, the association recommends allowing the deduction of losses from digital asset value depreciation over three years, reducing the overall tax burden.

The third significant change sought by the JBA is the elimination of income tax on profits gained through individual crypto asset exchanges. The association believes that as crypto asset exchanges become more prevalent in the borderless Web3 era, calculating taxes on such transactions will be increasingly challenging due to the variety of assets and transactions involved.

The JBA's request aligns with the Japanese government's efforts to foster the growth of the digital asset industry and promote the web3 sector. As discussions on tax reforms unfold, industry participants and businesses in Japan will closely watch for potential changes that could boost the country's position in the global crypto market and drive further innovation in the web3 economy.

The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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