The Japan plans to implement a flat tax of 20% on crypto gains, ending the progressive regime that could reach up to 55% and finally aligning the taxation of digital assets with that of stocks.
End of the Progressive Regime Up to 55%, Welcome to a Flat Tax
Today, Japanese individuals are subject to a progressive tax that could climb to 55% on their crypto profits. A burden often cited as the main reason for the lack of domestic dynamism, despite a highly regulated local market and significantly secured since the post-Mt. Gox era.
The reform, supported by the government and the ruling coalition, would move crypto into the “separate taxation” regime. Capital gains would no longer be aggregated with salaries or professional income. They would be independently taxed at a rate of 20%, 15% for the central administration and 5% for prefectures.
This change is expected to be included in the 2026 tax package, finalized by the end of December.
A Necessary Upgrade for a Booming Market
The political message is clear: crypto is now seen as a legitimate investment, comparable to stock markets. By aligning the taxation of digital assets with that of securities, Japan aims to attract more domestic activity and reduce the exodus of traders to more welcoming jurisdictions.
This change comes as Japanese platforms show a steady increase in volume. According to the Japan Virtual and Crypto Assets Exchange Association, spot volumes surpassed $9.6 billion in September. A momentum that strengthens the case for a more competitive tax policy.
A Signal of Normalization in the Asia-Pacific Region
The reform could have a ripple effect in Asia. Unlike South Korea, which has repeatedly postponed its own crypto tax framework, Japan is moving towards an orderly integration of the sector. The country demonstrates that it is possible to combine strict regulation, robust infrastructure, and a more rational tax environment.
For Japanese investors, the prospect is simple: a stable, predictable, and finally competitive framework. For Tokyo, it is a strategic step to re-anchor crypto activity in the country.
If the reform is adopted by the end of December, 2026 could be the year when Japan definitively closes the tax loophole that stifled its crypto market.
