Japan’s National Tax Agency (NTA) has recently updated its corporate tax regulations, providing much-needed clarity regarding the treatment of cryptocurrencies. Under these new rules, companies will no longer be subject to the current 30% corporate tax on unrealized gains from crypto assets, according to a notice released last week. However, certain conditions must be met for crypto assets to be excluded from a company’s asset valuation based on market value.
To benefit from the tax exemption, companies must continuously hold the coins after the issuance, and the crypto assets themselves must be subject to transfer restrictions. Until now, Japanese companies have been required to pay a 30% corporate tax rate on their holdings, even if they haven’t realized a profit through a sale, according to Tokentax. Critics argue that this rule has hindered the growth and innovation of blockchain technology within the country. Some companies, such as Web3 infrastructure developer Stake Technologies Pte., have even relocated abroad to avoid Japan’s strict regulations.
The founder of Polkadot-based smart contract platform Astar Network and CEO of Stake Technologies, Sota Watanabe, has welcomed the change as a way to prevent Japan’s crypto companies from relocating overseas. Nevertheless, Watanabe calls for further tax relief by extending it to holdings of tokens issued by other companies, which would enable the expansion of domestic projects.
The revision to Japan’s corporate tax regulations comes at a pivotal time when the crypto industry faces tightening regulatory pressure in the United States. The U.S. Securities and Exchange Commission (SEC) has recently pursued legal action against both Binance and Coinbase over allegations of offering unregistered securities. As a result, some Japanese crypto industry stakeholders see an opportunity to attract talent and investment to Japan as a more crypto-friendly environment.
Moreover, Japan has implemented a legal framework specifically addressing stablecoins, which are virtual tokens backed by traditional fiat currencies or commodities, allowing for stable prices. The revised Payment Services Act allows the use of registered stablecoins as
Source: Decrypt
