Those associations call for the separate taxation of cryptocurrencies at 20%, allowing the transfer of the loss for three years. Fearing a talent exodus, those groups request the government to relax corporate tax regulations, taking the tax rate from 55% to 30%.
Two Japanese crypto asset associations jointly published a request for tax reform, including the separate taxation of cryptocurrencies at 20%. The groups are the Japan Crypto Asset Business Association (JCBA) and the Japan Crypto Asset Exchange Association (JVCEA).
In their request, the JCBA and the JVCEA mention several issues they consider an obstacle to growth in the sector.
Those problems include the need to facilitate tax returns and the lack of consistency within the system. The groups also discuss the confrontation with foreign cryptocurrency tax systems and the relevance of those assets in the Web 3.0 strategy.
The Japanese Ministry of Economy Trusts the Use of Web 3.0
In July, the Japanese Ministry of Economy, Trade, and Industry (METI) established a Web 3.0 office. They seek to collaborate on developing the business environment and understand the sector better.
Gaku Saito, the chairperson of the Tax System Study Group, considers Web 3.0 a crucial point in the tax reform request. He said the possession of cryptocurrencies by citizens would increase dramatically if the Japanese government made it a national strategy.
The request for tax reform calls for the separate taxation of cryptocurrencies at a 20% rate. People may transfer the loss from the amount of cryptocurrency-related income for three years from the following year.
Japanese Crypto Asset Associations Want the Industry to Thrive
Japanese cryptocurrency advocacy groups have worked hard to ensure the success of the cryptocurrency industry. Fearing an exodus of talent, those associations requested the government to relax corporate tax regulations. They also want the current tax rate on individual investors to go from 55% to 30%.
Financial institutions are also aware of the relevance of cryptocurrencies in the economic system. In July, the FSA revealed they might allow Japanese fiat banks to custody crypto assets, arguing investor protection.
The Regulators from Many Countries Work on Cryptocurrency Taxes
The governments of many countries do not know how to deal with the taxes on cryptocurrency. For example, South Korea postponed its crypto tax plans again until 2025. In the case of India, they have imposed strict tax rules, causing the trading volumes to plummet in this market.
Since the crypto asset class adoption is increasing, investors will have to face taxes on cryptocurrencies. Along with general regulation, this will cause some difficulties in the short term despite the legitimization of the market.
The relevance of cryptocurrencies in the economy has led many regulators worldwide to regulate them. The payment of taxes on the crypto asset class causes fear among advocacy groups seeking advantages for their users.
Meanwhile, Bitcoin (BTC) is trading at around USD 23,046 and has accumulated a 0.5% gain over the last week. While its daily trading volume is above USD 23.13 billion, its market capitalization is about USD 440.46 billion, according to CoinGecko.
By Alexander Salazar