According to CoinPost reports, on the 20th, Japan's ruling Liberal Democratic Party announced a series of adjustment directions regarding the controversial 'digital asset (cryptocurrency) tax system' in the tax reform outline. The documentation of this outline indicates a significantly increased possibility for future tax adjustments, laying a foundation for accelerating the development of the cryptocurrency industry and enhancing international competitiveness.
Currently, Japan classifies cryptocurrency trading taxation as 'miscellaneous income,' with a maximum tax rate of 55%. Additionally, exchanges between cryptocurrencies are also subject to taxation, and there is no possibility of cross-year loss offsetting. This high tax rate and restrictions have become significant reasons for the outflow of industry talent and companies, also threatening the competitiveness of web3-related innovation sectors in Japan.
Direction and Key Points of Tax Reform
According to the tax reform outline, the Liberal Democratic Party will focus on promoting the following directions regarding cryptocurrencies:
Incorporate cryptocurrency trading into separate taxation categories: the target tax rate will be reduced to 20%, allowing investors to declare at a fixed tax rate, making the tax burden system clearer.
Improve relevant laws and regulations: position cryptocurrencies as regulated financial products and strengthen investor protection and reporting obligations for traders.
Promote economic assetization and enhance security: strengthen cybersecurity measures to ensure that cryptocurrencies can sustainably become an important asset of the national economy.
Members of the Liberal Democratic Party's digital department and the first digital minister, Takuya Hirai, have submitted an urgent proposal to the Financial Services Agency and relevant authorities, receiving a certain level of support. If the future system design can be realized, it will significantly reduce the tax burden while attracting more domestic and foreign investors, stimulating industrial development.
Although this outline is currently only in the 'review stage' and specific measures still need further discussion and refinement, the fact that it has been included in the outline is already a significant advancement. If the relevant tax adjustments are eventually realized, it is expected that investor-friendly policies, including reducing the tax rate to 20% and allowing cross-year loss carryforward, will be implemented.
Additionally, the outline also mentions the issue of the '1.03 million yen income tax threshold' unrelated to cryptocurrencies, planning to raise the tax exemption standard to 1.23 million yen, with hopes of gradually reaching 1.78 million yen. This move aims to alleviate the tax burden on low-income families and support labor market dynamics.
This series of measures in the Japanese political arena demonstrates a commitment to gradually adapt to the trends of digital economy and financial innovation, creating a fairer and more competitive tax environment for the cryptocurrency industry. The Japanese industry generally expects that in the coming years, Japan's policies will further relax and deepen, making Japan one of the important markets in the global cryptocurrency market.
"Japan will promote multiple cryptocurrency policy reforms, including lowering the tax rate to 20%" was first published on (Block Media).