Japan Considers Eliminating Corporate Tax on Crypto Gains Yet to be Realized

• Japan's Approach to Cryptocurrency Taxation
• Implications of the Proposed Tax Change
• Impact on Web3 businesses in Japan
• The Government's Role in Industry Development
• Web3 Companies and Taxation Challenges
• Upcoming Web3 Promotion Policies in Japan

Japan's Approach to Cryptocurrency Taxation

The Japanese Cabinet has given its approval to a proposal by the ruling Liberal Democratic Party to terminate the taxation on unrealized cryptocurrency profits, as reported by CoinDesk Japan. If this proposal becomes law, it would significantly stimulate the growth of the Web3 sector within Japan.

Implications of the Proposed Tax Change

The proposal is set to be discussed in the Diet, the Japanese parliament. The potential law would end corporate taxes on the disparities between market and book values of cryptocurrencies issued by other companies. The tax change would address a current inconsistency in which third-party issued assets are treated differently from those issued directly by holders. At present, holders are not taxed on the market-to-market values of their assets.

Impact on Web3 businesses in Japan

According to CoinDesk Japan, this discrepancy has been a major setback for Web3 businesses within the country. If realized, the new law could significantly alleviate these challenges.

The Government's Role in Industry Development

The government of Prime Minister Fumio Kishida has been considering recommendations from industry associations such as the Japan Crypto Asset Business Association (JCBA) and the Japan Blockchain Association. The insights from these associations are seen as instrumental in driving the industry's growth, which the government envisions as a crucial element of economic reform. This approach, which involves politicians shaping policy advancement, marks a shift from the traditional practice in Japan where such roles are typically handled by the bureaucracy.

Web3 Companies and Taxation Challenges

Web3 companies have reportedly been relocating overseas due to tax liabilities incurred even before they make any profits, reveals Gaku Saito, chairman of the JCBA's tax review committee, in an interview with CoinDesk Japan. These businesses have been subjected to taxes on unrealized gains, which has compelled them to sell their assets, thus impeding business development.

Upcoming Web3 Promotion Policies in Japan

The Japanese government is expected to introduce more policies to foster the growth and promotion of Web3 companies in the country.

Edited by Jonathan Stoker