Japan to Implement Tax Exemption on Unrealized Crypto Gains from April 2024
In Brief
Japanese companies will no longer be required to pay taxes on ‘unrealized gains’ from holding cryptocurrency starting April 2024.
Japan’s government outlined its tax reform for the fiscal year 2024, stating that Japanese companies will no longer be required to pay taxes on “unrealized gains” from holding cryptocurrency.
The new changes are scheduled to take effect from April 1, 2024—the beginning of Japan’s financial year. The bill is set to be submitted to the regular session of Congress in January next year and will require approval from both the House of Representatives and the Senate.
Previously, corporations had to report cryptocurrencies received from third parties, with taxes calculated based on the difference between market value and book value, regardless of whether the firm sold the cryptocurrency. However, the upcoming changes mean that corporations will only be taxed on profits from the sale of cryptocurrencies, aligning with the tax obligations of retail investors under Japanese tax laws.
The government initially disclosed the details of its 2024 tax reform outline in a document published on Dec. 14, and it has now officially announced the final decision.
The relaxed tax rules could potentially encourage more companies to explore Web3-related initiatives in Japan, with the overarching goal of curbing overseas fund outflows.
Japan is Actively Embracing Crypto and Web3
Japan stands out as a jurisdiction known for its meticulous approach to overseeing digital assets, ensuring strict adherence to the evolving regulatory framework.
Earlier this year, the Japanese parliament approved stablecoin regulations to enhance investor security. The “Payment Services Law” officially recognizes fiat-backed stablecoins as “electronic payment methods” and sanctions their issuance. However, it’s essential to note that only licensed banks, registered remittance agents, and trust companies are authorized to issue stablecoins.
In a recent development, the issuer of USD Coin, Circle, has partnered with Japanese financial services firm SBI Holdings to further stablecoin adoption and Web3 services in the region.
Japan’s progressive reforms signal a strategic shift in cryptocurrency taxation, marking a milestone in the nation’s digital asset regulatory landscape. The evolving regulatory approach and openness to cryptocurrencies and Web3 position Japan as a hub for digital finance, fostering innovation and mitigating fund outflows to more tax-friendly jurisdictions.
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
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Alisa is a reporter for the Metaverse Post. She focuses on investments, AI, metaverse, and everything related to Web3. Alisa has a degree in Business of Art and expertise in Art & Tech. She has developed her passion for journalism through writing for VCs, notable crypto projects, and scientific writing. You can contact her at alisa@mpost.io
