In a tax reform proposal submitted on August 30, the FSA called for treating crypto assets similarly to traditional financial investments.
This move could potentially reduce the tax burden on individuals and corporations involved in cryptocurrency trading and holdings.
FSA Aims to Ease Crypto Tax Burden
Currently, Japan’s tax regime imposes significant taxes on crypto profits. According to crypto accountants TokenTax, profits derived from crypto are classified as “miscellaneous income” and subject to tax rates that range from 15% to 55%. It depends on an individual’s income bracket.
Notably, the highest rate of 55% applies to earnings above 200,000 Japanese yen ($1,377), making it one of the highest tax rates on cryptocurrency globally. In contrast, income earned from stock trading is taxed at a flat rate of 20% at its highest lev
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Corporate crypto holders are subject to an even more stringent regime. Japanese corporations holding crypto must pay a flat 30% tax on their holdings at the end of the financial year. Regardless of whether or not they made a profit. This rule has been a significant point of contention for businesses and investors.
The proposed reforms aim to align the taxation of crypto assets more closely with that of stocks and bonds. This can potentially reduce tax rates and promoting a more favorable environment for crypto investment. The move reflects the FSA’s broader strategy to integrate cryptocurrencies into the mainstream financial system.
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