MJP –
Japan now makes a surprising announcement to lower its crypto tax from 55% down to 20%, a plan that may take place by 2025.
Japan’s financial regulator has announced plans for a significant overhaul of the tax code for fiscal year 2025, which includes provisions for cryptocurrencies that could reduce their tax rates.
In a request for tax reform dated August 30, Japan’s Financial Services Agency (FSA) emphasized the need to classify cryptocurrencies as traditional financial assets available for public investment.
The FSA stated, “Cryptocurrency should be treated as a financial asset that is an investment target for the public,” urging a reevaluation of its tax treatment.
Currently, profits from cryptocurrencies in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%.
The highest rate of 55% applies to earnings exceeding 200,000 Japanese yen (approximately $1,377), depending on the taxpayer’s income bracket.
In contrast, profits from stock trading are taxed at a maximum rate of 20%.
For corporate holders of cryptocurrencies, a flat tax rate of 30% is imposed on their holdings at the end of the fiscal year, regardless of whether they have realized any profits through sales.
Tax reform requests are submitted by government ministries to the ruling party, which then forwards them to a tax system research committee and the national legislature for consideration.
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For the reform to become law, it must be approved by both houses of the Japanese government: the House of Representatives and the House of Councilors.
Advocates for the crypto industry in Japan have long sought changes to the national tax policy for digital assets.
The Japan Blockchain Association, a pro-crypto lobbying group, formally requested a reduction in the tax rate on cryptocurrencies in 2023.
On July 19, the association submitted another proposal for tax reform for the 2025 fiscal year, aiming to encourage growth in the nation’s crypto sector.
Their suggestions included a flat 20% tax rate for cryptocurrencies and allowing a three-year loss carryover deduction.
Despite these initiatives, there have been no significant policy changes for the crypto industry in Japan to date.
