The Japanese government has reportedly ended the imposition of unrealized gains tax on crypto assets held by corporations, local media outlet CoinPost reported.
In a Dec. 22 cabinet meeting, the authorities reportedly approved the discontinuation of taxing corporations for unrealized gains derived from cryptocurrencies issued by third parties. This policy change is slated to come into effect on April 1, 2024, marking the beginning of Japan’s fiscal year.
Under the new regime, corporations will only be taxed when they sell their crypto assets, a shift from the previous system where taxes were levied based on the difference between the market value and book value for assets held at the end of each fiscal year.
The amendment significantly eases the tax burden on corporations managing and holding crypto assets. Consequently, it is expected to attract more institutional investors to Japan’s crypto landscape.
Additionally, it would foster increased adoption of Web3 technology, support local startups, and entice foreign crypto enterprises to the country.
However, the proposed revision must still be submitted to a regular Diet session set in January 2024 and approved by the country’s lawmakers.
The decision to revoke the tax obligation stems from a request made by the Japan Crypto Asset Business Association (JCBA).
JCBA is also advocating for a reduced tax rate on crypto-to-cash conversions, proposing a lump-sum tax for traders looking to convert their crypto assets into cash. Additionally, the association recommends deductions in carry-over taxes applied to profits and losses.
These changes in taxation policy signal a significant shift in Japan’s approach to regulating crypto assets. The Asian country aims to create a more conducive environment for crypto-related businesses while balancing taxation requirements.
Japan is one of the few countries that has maintained strict crypto regulations. The regulatory framework was crucial in safeguarding FTX Japan customers’ funds from the parent company’s bankruptcy.