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Japan Exempts Token Issuers from the 30% Crypto Tax on Paper Gains

New tax exemption in Japan allows token issuers to save on corporate taxes, boosting the growth of the crypto industry and encouraging token issuance activities

Shashank Bhardwaj
Published: Jun 27, 2023 02:29:16 PM IST
Updated: Jun 27, 2023 04:44:52 PM IST

Japan Exempts Token Issuers from the 30% Crypto Tax on Paper GainsImage: Shutterstock

Japan's National Tax Agency has introduced new tax rules that exempt token issuers from paying corporate taxes on unrealised crypto gains. The move comes as part of broader tax reforms and aims to facilitate business activities related to token issuance in the country.

The tax exemption for token issuers was implemented on June 20, following the approval of a proposal by the Japanese government earlier this year. Under the previous regulations, even unrealised gains were subject to a 30% corporate tax rate, posing a significant burden on crypto firms.

The revised tax rules are expected to make it easier for companies to engage in token issuance-related businesses and promote the growth of the Bitcoin industry within Japan. The ruling Liberal Democratic Party expressed optimism about the impact of the tax exemption, highlighting its potential to foster a more favourable business environment.

Japan has been actively working on enhancing its regulatory framework for the crypto sector. The country recently enforced stricter Anti-Money Laundering (AML) measures to align with global standards. These measures aim to enhance transparency and traceability in crypto transactions.

Furthermore, Japan implemented legislation last year that prohibited the issuance of stablecoins by non-banking institutions. This regulation ensures that stablecoin issuance is limited to licensed banks, registered money transfer agents, and trust companies, strengthening financial stability and consumer protection. Notably, Japanese regulations facilitated the swift return of assets to users of the FTX exchange following its global collapse, distinguishing Japan's response from that of other countries.

The tax exemption for token issuers further solidifies Japan's position as a crypto-friendly nation, supporting the industry's growth while ensuring compliance with regulatory standards. By introducing these new tax rules, Japan seeks to attract more crypto-related businesses and talent, establishing itself as a leading hub for the crypto and blockchain sectors. The tax reforms contribute to Japan's ongoing digital transformation and reaffirm its commitment to staying at the forefront of technological advancements.

Shashank is the founder of yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash

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