The Japan Blockchain Association has called for a review of the crypto taxation system proposed by the government. The director of the association Yuzo Kano made this request to the nation’s government stating that the taxation system for Crypto assets is “hindering the growth of the web3 (decentralized web) business in Japan.”
A 2022 analysis showed that Japan ranks forward in global crypto-asset but ranked 55th in terms of the tax system for crypto assets.
At the WebX conference, Gaku Saito, CEO of Pafin Co., Ltd. and chairman of JCBA’s tax review committee, highlighted the significance of generating substantial social momentum to drive tax reform concerning crypto assets. He emphasized how the benefits and diverse use cases of crypto assets are increasingly spreading throughout the country.
Yuzo Kano, who is the CEO of bitFlyer Inc., is also interested to see an environment where citizens can own and use crypto assets. As disclosed by a Japanese local news outlet, there are three specific requests made by the association.
Firstly, the focus of the association’s request is the removal of the year-end unrealized gain taxation on third-party issued tokens. This taxation system is posing an entry barrier for domestic companies in Japan into Web3, JBA said.
The result of the removal will be that companies won’t have to sell tokens they hold for tax purposes, which is expected to significantly reduce barriers to entering into Web3. The current tax system’s requirement to sell tokens for tax payments can lead to a drop in token prices and hinder the growth of the token-based economy, the association mentioned in their request.
Secondly, the association is asking for a change in the taxation method for individual crypto asset transactions in Japan to a separate self-assessment taxation system with a uniform tax rate of 20%. According to statistics, the number of people opening crypto asset trading accounts in Japan is steadily progressing. In April 2023, the number of accounts opened reached approximately 3.72 million.
The idea of separate self-assessment taxation would allow losses to be carried forward and deducted for three years from the year following the loss occurrence, which helps in reducing taxes. Interestingly, in a survey carried out by JBA, 43.9% of the survey participants expressed interest in more than doubling their investment amount if this taxation method is implemented.
Finally, the association is requesting that income taxation on profits each time crypto assets are exchanged be eliminated. This implies that individuals or companies will not be required to pay taxes on the gains they make each time they trade or exchange one cryptocurrency for another.
According to JBA, engaging with DeFi, NFTs, and the market for web3 becomes easier when operations prioritize convenience for crypto assets. The association also believes that implementing tax reform requests will not only give them an advantage in the web3 space locally and internationally but also contribute to the future of the Japanese economy.
Specifically, they anticipate an increase in tax revenues from a rise in the number of crypto asset users, the amount invested in crypto assets, profits, and proper tax returns, among other factors.
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