Japan Blockchain Association Calls for Major Crypto Asset Tax Reform - Investor Bites

Japan Blockchain Association Calls for Major Crypto Asset Tax Reform – Investor Bites

Time Stamp: July 29, 2023 5:22 AM
Japan Blockchain Association Calls for Major Crypto Asset Tax Reform - Investor Bites PlatoBlockchain Data Intelligence. Vertical Search. Ai.

SNEAK PEEK

  • JBA urges a flat 20% tax rate on individual crypto transactions.
  • Abolishment of year-end unrealized gain tax could boost Web3 growth.
  • Crypto tax reform may double investments, boosting Japan’s economy.

In a bid to streamline the cryptocurrency landscape in Japan and to catalyze its Web3 (decentralized web) industry growth, the Japan Blockchain Association (JBA), led by Yuzo Kano of bitFlyer Inc., has implored the government for a major overhaul of the crypto asset taxation structure. Coinpost reports that the association has urged reforms, including shifting the taxation method for individual crypto transactions to a flat tax rate of 20%, down from a maximum rate of 55%, and scrapping the profit income tax for each crypto transaction.

In June 2023, Japan’s National Tax Agency made strides in blockchain-friendly legislation, altering some corporate tax rules to alleviate blockchain startups from a 30-35% tax on unrealized gains from their digital tokens. This policy change was celebrated in the entrepreneurial sphere, as it addressed a key friction point. However, JBA reportedly asserts there’s more to be done to make Japan a competitive player in the growing Web3 space.

One of the main points on JBA’s reform agenda is abolishing year-end unrealized gain taxation on tokens issued by third parties. As per the report, this taxation impedes domestic firms seeking to participate in the evolving Web3 industry. By eliminating this tax, companies would not have to liquidate their tokens for tax purposes, thus lowering the barriers to entry into this promising digital economy.

With about 6.8 million crypto accounts opened in Japan as of April 2023, a recent survey has indicated that almost 44% of respondents would more than double their investments with a more favorable tax structure. Thus, these proposed tax reforms could lead to increased investment in the crypto sphere, contributing to the future growth of the Japanese economy under increasing pressure to innovate.

In addition, JBA believes the proposed reforms will have a positive effect on tax revenues. They predict increased user engagement with crypto assets, increased investment amounts, and higher profit realizations could offset any initial decline in tax revenues and ultimately boost the country’s treasury.

By acting on these requests, JBA suggests, Japan could bolster its reputation as a pioneer in the Web3 era, thereby expanding its crypto-economic zone, representing an exciting new frontier in the global digital economy.

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