Advocates of Japan’s crypto industry are demanding a review of the national tax regime for digital assets. The Japan Blockchain Association (JBA), an independent lobbying group not affiliated with the government, highlighted three important steps to alleviate the financial burden on crypto owners in an official request to the country’s government.
The request was published on the association’s website on July 28. The JBA refers to the taxation of crypto assets as the biggest obstacle for Web3 businesses in Japan and as a factor that prevents citizens from actively owning and using cryptocurrencies. Therefore, the group specifies three major changes that could be made to ease the pressure on the digital economy.
The Association’s Requests in Order
The first request is the elimination of unrealized capital gains taxes on companies that hold crypto assets until the end of the year. Unrealized gains refer to profits that have been accrued on paper but the relevant transactions have not been completed. The JBA is trying to eliminate taxes on unrealized gains reported in third-party statements. In June, the National Tax Agency of Japan exempted local businesses from taxing unrealized gains from the crypto assets they have exported.
The second request is related to the method of taxing personal crypto trading gains. It proposes converting this method into separate taxation instead of evaluating it with a uniform tax rate of 20% from the existing comprehensive taxation. Additionally, a three-year period is suggested for deducting losses from the depreciation of digital assets.
The third request from the Japan Blockchain Association is for the removal of income tax on profits from the sale of crypto assets every time an individual exchanges them.
“In the unlimited Web3 era, the possibility of crypto asset exchange becoming mainstream in the economic region is high. Due to the wide variety of transactions and types of traded crypto assets, tax calculation will be extremely difficult.”
Japan and the Web3 Industry
At the end of July, Prime Minister Fumio Kishida reaffirmed Japan’s commitment to developing the country’s Web3 industry, emphasizing its potential to transform the internet and ignite social change.
On the same day, Binance CEO Changpeng Zhao announced that the cryptocurrency exchange will launch its services on a new Japanese platform in August 2023.
