Japan Approves Tax Reform for Companies Holding Third-Party Cryptocurrencies

    Japan’s fiscal 2024 tax reform plan brings significant changes for companies holding third-party cryptocurrencies. The amendment eliminates the year-end mark-to-market valuation tax, aligning corporate taxation with individual investor rules. This move is seen as an effort to inject liquidity into the market and position Japan as a hub for crypto activity in Asia.

    In a significant move, the Japanese government has approved a tax reform affecting companies holding third-party-issued cryptocurrencies. The amendment eliminates the year-end mark-to-market valuation tax, relieving corporations from the previous requirement to record profits or losses based on market value disparities at the fiscal year-end.

    The reform signifies a departure from the previous practice, as assets assumed to be held continuously will now be exempt from mark-to-market valuation. Companies will now face taxation solely on profits generated from the sale of digital currencies and tokens, aligning the corporate tax system with the rules applicable to individual investors.

    Analysts view this move as Japan’s strategy to inject more liquidity into the crypto market, putting it in line with other Asian regions vying to become crypto activity hubs. The amendment, influenced by the Japan Crypto Asset Business Association’s request, is anticipated to support local startups in the blockchain sector and attract international projects. The proposal is set for presentation in the upcoming Diet session in January, requiring approval from both the House of Representatives and the House of Councilors.

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