Token issuers in Japan have recently been exempted from paying a set 30% corporate tax rate on unrealized cryptocurrency gains, following a law revision by the National Tax Agency in June 20. This tax exemption arrives nearly half a year after the Japanese government approved a proposal aiming to eliminate the requirement for crypto businesses to pay taxes on paper profits made from tokens they issued and held.
New crypto tax rules have been under discussion in Japan since August last year, as part of a broader tax reform slated for 2023. The tax authority’s final approval came this week. Before this revision, unrealized gains were subject to taxation, causing concern for many businesses that are involved in issuing tokens.
The ruling Liberal Democratic Party (LDP) anticipates that these new tax rules will make it more appealing for companies to engage in token-related operations.
Japan’s cryptocurrency landscape has undergone significant changes. Beginning on June 1, the country has been imposing stricter Anti-Money Laundering (AML) measures in an effort to track cryptocurrency transactions and align Japan’s legal framework with international crypto laws. This revision to the AML legislation came after the Financial Action Task Force (FATF) identified flaws in the existing laws last December.
Last June, the Japanese government passed a bill prohibiting the issuance of stablecoins by non-banking organizations. Enforced just recently, this bill mandates that stablecoin issuance in Japan be restricted to licensed banks, registered money transfer agents, and authorized trust companies.
Japan was among the first nations to legalize crypto as a type of private asset and has some of the world’s strictest crypto regulations. The country’s financial regulator has tightened rules on crypto exchanges following the hacks of Mt.Gox and Coincheck. Local regulations have been perceived as instrumental in enabling a swift return of assets to FTX users in Japan after the exchange’s global collapse, unlike users in other countries who still have no clear timeline for their refunds.
The move to exempt token issuers from the 30% crypto tax on paper gains showcases Japan’s ongoing efforts to balance strict regulation with fostering innovation and growth within the cryptocurrency sector. Only time will tell if this initiative proves successful and benefits the broader ecosystem.
Source: Cointelegraph
