Token issuers in Japan are no longer subject to a 30% corporate tax on unrealized cryptocurrency gains from their holdings, according to a legal interpretation notice regarding partial revisions to corporate tax rules issued by Japan’s National Tax Agency.
Japan Eases Corporate Tax Rule for Token Issuers
According to a local media report, this exemption has two main conditions. First, the cryptocurrency must be issued by the company and held continuously from the time of issuance. In addition, the crypto asset must continue to be subject to transfer restrictions from the time of issuance.
The latest changes come six months after Japan’s Liberal Democratic Party’s (LDP) tax committee approved a proposal to exempt companies from paying taxes for paper gains on crypto assets they hold after issuing them. The LDP included the proposal in its tax reform outline for fiscal 2023, but Japan’s tax agency only approved it last week.
Before now, gains from crypto assets, including unrealized gains, were subject to a corporate tax of 30% in Japan – a measure that has forced several crypto-related firms to pull out of the country to seek safe haven.
“It has long been pointed out that this rule puts a burden on companies and hinders innovation in cryptocurrencies and blockchains. Because of this Japanese law, some companies have chosen to do business overseas,” the report stated.
However, with the tax burden now relaxed, it is expected to be easier for industry firms to do business in Japan. This marks a step forward in improving the business environment for crypto. Although, there are still several issues to be addressed.
Reviving the Crypto Asset Market in Japan
Moreover, the latest development also adds to Japan’s continued efforts to revive the crypto market in the country. For instance, in October, Japan said it is also planning to relax crypto rules by allowing crypto firms to list tokens without going through an extensive screening process except if the tokens are new to the Japanese market.
Genki Oda, vice chairman of Japan’s Virtual and Crypto Assets Exchange Association (JVCEA), said in a statement at the time that he hopes the relaxed measures will help “revitalize” the country’s crypto assets market.
Your crypto deserves the best security. Get a Ledger hardware wallet for just $79!