According to reports, the Cabinet has approved a change to the national tax system for digital assets, which will exempt Japanese businesses from paying tax on “unrealized gains” on their crypto holdings as of April of next year.
Local media state that the new tax reform was presented by the Japanese government on December 22, during a cabinet meeting. The new adjustments will take effect on April 1, 2024, which is the beginning of the Japanese fiscal year.
Previously, firms had to declare any cryptocurrency they got from third parties, regardless of whether they sold it, based on the difference between book value and market value.
However, as per Japanese tax regulations, corporations will only pay taxes on the earnings from the selling of cryptocurrencies, just like retail investors do.
In a paper released on December 14, the administration initially provided the specifics of its proposed tax reform for 2024.
On August 31, however, the nation’s Financial Services Agency first proposed to discard unrealized cryptocurrency gains.
The loosened tax regulations may encourage more businesses to engage in Web3-related activities in Japan.
Advances have already been achieved. To increase stablecoin acceptance and Web3 services in Japan, stablecoin issuer Circle, the group behind USD Coin (USDC), has partnered with SBI Holdings, a financial services company located in Japan.
As a result of 615 investigations, Japan’s tax authorities discovered 548 incidents of cryptocurrency-related tax violations in 2022, an increase of 35% from 2021.
The average amount of unreported cryptocurrency holdings, however, decreased by 19% from 36.5 million yen ($245,000) in 2021 to 30.7 million yen ($206,000) in 2022.
