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Tax Relief for Crypto Companies in Japan

Towards a Tax Relief for Crypto Companies in Japan:

  • The Japanese government is considering exempting companies from taxation on unrealized cryptocurrency gains.
  • This exemption would apply to companies holding long-term crypto-assets.
  • The 2024 tax revision, still pending legislative approval, marks a major turning point for the country’s crypto players.

A Revision of Japan’s Fiscal Regime for 2024

The Japanese government has approved a modification of the tax policy in 2024, aiming to exempt companies from taxation on unrealized cryptocurrency gains, provided that they hold these assets in the long term.

However, cryptocurrency assets considered short-term investments will continue to be subject to taxes:

Holdings of assets [crypto] issued by other companies that are considered short-term assets will continue to be subject to taxation on unrealized gains at the end of the year,”

said Daiki Moriyama, director of Oasys

Currently, for companies holding cryptocurrencies, these assets are taxed as profits or losses, based on the difference between their market price and their book value at the end of the fiscal year.

As you may have understood, the advantage of this new tax revision is that this assessment will no longer apply if companies hold the assets long-term, which means that companies would be taxed only on the profits generated from the sale of cryptocurrencies.

Japan Becoming More Crypto-Friendly?

This potential tax regime change, which still needs to be submitted and approved by the two chambers of the Japanese parliament in January 2024, comes after the country’s tax agency clarified in June that cryptocurrency issuers would no longer be subject to capital gains tax, which was around 35% on unrealized gains.

This tax reform demonstrates the Japanese government’s willingness to promote the development of Web3 companies, which is of vital importance for all stakeholders in this sector worldwide.

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