Japan Cryptocurrency Tax Japan is Crypto Community calls for end to paper gains tax

 

Japan is leading Cryptocurrency community groups plan to submit a proposal to Japan’s financial regulatory authority to address its high Cryptocurrency Taxes, which analysts warn make the country less competitive as a cryptocurrency hub. 

 

According to an internal memo accessed by Bloomberg, the proposal will be submitted to Japan is Financial Services Agency (FSA) by 31st July, requesting them to put an end to taxing unrealized profits on cryptocurrency holdings “if the firm owns them for purposes other than short-term trades.”

 

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The proposal also requests for the financial regulatory authority to reduce income tax rates on Cryptocurrency income for individual investors to 20%, which is quite less than the current rates that see some investors being taxed as high as 55%.

 

Cryptocurrency tax platform, Koinly’s head of tax for the APAC region, Danny Talwar— told Cointelegraph that the current regulatory environment in Japan makes it difficult for enterprises and individual investors to hold digital currencies assets compared to more Cryptocurrency-friendly nations such as UAE. He further mentioned that high cryptocurrency tax rates make the country less competitive on the international front compared to nations like Singapore and Dubai, which are rapidly becoming digital asset hubs for enterprises.

 

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Talwar went on further to say that the taxation of unrealized capital gains on Digital Assets might lead to situations where taxes paid are not equivalent with the asset value on realization. This is particularly common for volatile asset classes, such as cryptocurrency.

 

Talwar added that the acceptance of the proposal by the FSA would be a “step towards crypto-friendly regulation” in Japan, although the exact contents of the proposal are not yet known.

 

 

Talking about Crypto regulation, Talwar acknowledged that “it should not stifle innovation in this fast-growing industry.” But, before doing so, it is crucial that the regulatory bodies have a clear understanding of how the taxation of Digital Assets fits comfortably within the current tax regimes and regulatory frameworks, he said.

 

Speaking to Bloomberg news, CEO of Web3 infrastructure protocol Stake Technologies, Sota Watanabe mentioned that the current corporate tax rate was too high, making Japan “an impossible place to do business:”

 

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He said that Japan is an impossible place to do business, the global competition for Web 3.0 dominance is underway and Japan is yet to reach the starting point. Watanabe is one of several CEOs who relocated their Cryptocurrency companies to Singapore, citing high corporate taxes as one of the reasons for the transition.

 

Japanese politician Masaaki Taira also claimed that regulatory bodies need to relax cryptocurrency regulations to “stem the outflow of digital talent.”

 

The proposal sent to FSA is reportedly being prepared by the Japan Crypto Asset Business Association (JCBA) and the Japan Virtual & Crypto Assets Exchange Association (JVCAEA), whose associates are made up of cryptocurrency firms including the Bitcoin Association and forex broker WikiFX.

 

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