Japan Blockchain Association Asks Tokyo to Review Crypto Tax System

An industry organization in Japan has suggested that the government should reform the tax rules for crypto assets and transactions. Its members are convinced that current tax regulations impede the growth of the country’s Web3 economy and discourage taxpayers from owning and using cryptocurrencies.

Government of Japan asked to change tax laws for crypto profits and transactions

The Japan Blockchain Association (JBA) has sent a request to the Tokyo government to revise the tax regime for virtual currencies. The organization led by co-founder and CEO of Japanese cryptocurrency exchange Bitflyer, Yuzo Kano, insists that the proposed changes would allow more domestic companies to enter the Web3 sector.

The JBA is calling for an overhaul of the tax system for crypto assets, which it says is hampering the growth of Japan’s Web3 business, as well as the development of an environment where citizens can own and use Japanese digital assets. Cryptocurrency news outlet Coinpost reported on Saturday.

Last month, Japan’s National Tax Agency (NTA) modified some corporate tax rules to exempt companies from taxing year-end unrealized profits on cryptocurrencies they issue. The association now wants unrealized gains from tokens issued by third parties to also be exempt, saying such a charge is one of the barriers preventing entry into the Web3 market.

“If the tax on unrealized gains is removed at the end of the term, companies will no longer need to sell the tokens they own for tax purposes… Under the current tax system, selling tokens to pay taxes can cause the price of tokens climb. tokens fall, which can hurt the growth of the token-based economy,” explained the JBA.

The organization is also asking to change the tax method for individual cryptocurrency transactions to separate reverse charge taxes with a flat rate of 20%. In addition, the association suggests that losses be reported and deducted in the three years following the year in which they occurred, reducing the tax.

The JBA cited data from the Japan Crypto Trading Association showing that the number of people opening cryptocurrency trading accounts in Japan continues to grow. As of April 2023, there were approximately 6.8 million. He also noted that nearly 44% of respondents to his own survey said they would more than double their investments if they switched to separate reverse taxes.

The industry body also wants the Japanese government to eliminate income tax on profits made from trading crypto assets. The JBA believes that these changes would increase the number of cryptocurrency users in the country, as well as the amounts invested in crypto assets, and ultimately lead to higher tax revenues for Japan.