- Japan’s current tax on crypto gains will be reduced to 20% from 55%.
- FSA proposes cryptocurrencies as traditional financial assets.
Japan’s Financial Services Agency (FSA) has unveiled plans to amend the nation’s tax laws to lower the tax burden on crypto assets by 2025. This aligns with the broader tax code reform to bring cryptocurrencies with traditional financial assets.
The proposed reforms, detailed in an August 30 request, are part of a broader review of the fiscal code for the year 2025. The country’s financial regulator lowered the tax rate on crypto profits from the current 55% to 20%.
However, the tax reform request is sent to a tax research committee and Japan’s legislature for review. If the request accepts by the houses of the Japanese government, the reform will be active.
Japan’s Crypto Tax Reformation
The FSA emphasizes that cryptocurrency transactions should be like the traditional financial assets that the public can invest in. The regulator stated that it is essential to examine whether cryptocurrency should be treated as an investment asset for the public.
The corporate holders of crypto assets are to pay a 30% tax on their holdings, despite selling their assets at a profit. Currently, the profits from cryptocurrency in Japan comes under miscellaneous income. The rates range from 15% to 55%, depending on the individual’s income bracket. The highest rate applies to earnings exceeding 200K Japanese yen (approximately $1,377). In contrast, the tax profits from stock trading is at a maximum rate of 20%.
Moreover, the crypto advocates in Japan have fought for revisions to the tax regime for digital assets. The Japan Blockchain Association (JBA), a pro-crypto lobbying group, has requested a tax rate reduction in 2023. In addition, JBA submitted another request for the 2025 fiscal year on July 19, pushing for a 20% tax rate and a three-year carryover deduction for crypto losses.
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