- June 26, 2023
- Posted by: [email protected]
- Category:
The National Tax Agency of Japan has recently made a partial revision to its corporate tax guidelines, introducing new tax regulations for token issuers. In a significant development, token issuers in Japan will no longer be required to pay corporate taxes on unrealized gains from cryptocurrencies. The law revision, which came into effect on June 20, follows the Japanese government’s approval of a proposal to eliminate the tax obligation on paper gains of tokens issued and held by crypto firms.
The discussions surrounding new crypto tax rules in Japan have been ongoing since August of last year as part of a broader tax reform for 2023. However, it is only now that the tax authority has given its final approval. Under the new regulations, Japanese companies issuing tokens are exempt from the standard 30% corporate tax rate on the gains derived from these holdings. Prior to this revision, even unrealized gains were subject to taxation.
The ruling Liberal Democratic Party (LDP) aims to create a more favorable business environment for companies involved in token issuance with this tax exemption. The LDP anticipates that this move will make it easier for various companies to engage in token-related business activities.
Japan’s cryptocurrency industry has recently witnessed significant transformations. Since June 1, the country has been implementing stricter Anti-Money Laundering (AML) measures to align its legal framework with global crypto regulations. The AML legislation was revised in December after the Financial Action Task Force (FATF) found the previous regulations to be insufficient.
Furthermore, in June of the previous year, the government passed legislation that prohibited non-banking institutions from issuing stablecoins. This recently implemented bill restricts stablecoin issuance to licensed banks, registered money transfer agents, and trust companies in the country.
As one of the pioneering countries to legalize cryptocurrencies as a form of private asset, Japan has established some of the strictest crypto regulations globally. Following the hacking incidents involving Mt.Gox and Coincheck, Japan’s financial regulator tightened rules for crypto exchanges. It is believed that these local regulations facilitated the prompt return of assets to FTX users in Japan after the exchange’s global collapse, contrasting with the experiences of users in other countries where refund deadlines were less clear.
