The Japanese government plans to relax tax regulations for domestic cryptocurrency businesses as it works to promote expansion in the country's IT and financial industries.
The new tax reduction
Even if they haven't made a profit through a sale, Japanese companies that issue cryptocurrencies are now compelled to pay a flat 30% corporation tax rate on their holdings. As a result, several locally established crypto/blockchain enterprises and talent have chosen to establish themselves overseas during the past several years for the past several years. (1)
On December 15, the Liberal Democratic Party (LDP) tax committee of Japan's ruling party, the Liberal Democratic Party (LDP), adopted a proposal that had been previously proposed in August, removing the need for crypto businesses to pay taxes on paper gains on tokens they have issued and owned. The milder crypto tax regulations are anticipated to be presented to parliament in January and take effect on April 1 for the start of the following fiscal year in Japan.
Akihisa Shiozaki, a politician for the LDP and a representative of its Web3 policy office, said in a December 15 interview with Bloomberg that this is a major step ahead, and it will become simpler for many firms to do business that includes issuing tokens. Despite the FTX catastrophe, the government's most recent action indicates that it is still eager to support and expand the domestic crypto and Web3 industry. (2)
The impacts of this decision
NFTs, blockchain, and the Metaverse will play significant roles in the nation's digital transformation, Prime Minister Fumio Kishida underscored in October. PM mentioned the digitalization of, for instance, national identification cards. The Japan Virtual and Crypto Assets Exchange Association, which Kishida had urged the self-regulatory group to do in June (3), also declared plans to abandon the rigorous review procedure for launching new tokens on exchanges in October.
Key players in the corporate sector have also expressed similar forward-thinking thoughts. On December 8, the world's largest bank, Sumitomo Mitsui Financial Group (SMBC), said it is embarking on a project to investigate the applications of soulbound tokens. SBTs is an acronym for Vitalik Buterin's proposal, a co-founder of Ethereum, to utilize tokens to represent individuals' digital identities.
