The Japanese government plans to relax tax regulations for domestic cryptocurrency businesses as it works to promote expansion in the country’s tech and finance industries.
Even if they haven’t made a profit through a sale, Japanese companies that issue cryptocurrencies are currently required to pay a set 30% corporate tax rate on their holdings. As a result, over the past few years, a number of domestically founded crypto/blockchain firms and talent reportedly decided to establish themselves elsewhere.
On December 15, the Liberal Democratic Party (LDP) tax committee of Japan’s ruling party, the Liberal Democratic Party (LDP), approved a proposal that had been initially proposed in August, removing the requirement that crypto companies pay taxes on paper gains from tokens they have issued and held.
The softer crypto tax regulations are anticipated to be presented to parliament in January and take effect on April 1 for the start of the following fiscal year in Japan.
Akihisa Shiozaki, a lawmaker for the LDP and a representative of its Web3 policy office, said in a Dec. 15 interview with Bloomberg that “this is a very big step forward” and “it will become easier for various companies to do business that involves issuing tokens.”
Despite the FTX catastrophe, the government’s most recent action seems to indicate that it is still eager to support and develop the domestic crypto and Web3 sector.
Nonfungible tokens (NFTs), blockchain, and the metaverse will all be significant factors in the country’s digital transformation, Prime Minister Fumio Kishida emphasised in October. The PM gave the example of digitising national identity cards.
As Kishida had requested the self-regulatory organisation to do back in June, the Japan Virtual and Crypto Assets Exchange Association also declared plans to abandon the rigorous screening procedure for listing new tokens on exchanges in October.
Key figures in the private sector have also expressed similar futuristic sentiments. On December 8, the world’s largest bank, Sumitomo Mitsui Financial Group (SMBC), revealed that it is working on a project to investigate the applications of soulbound tokens (SBTs).
SBTs are a proposal made by Vitalik Buterin, a co-founder of Ethereum, regarding the use of tokens to represent individuals’ digital identities.