The Japan Blockchain Association (JBA) is dedicatedly working on revamping the cryptocurrency taxation framework in Japan. Their goal is to foster a supportive environment for the growing Web3 industry while ensuring authenticity and originality. Leading this initiative is Yuzo Kano, who serves as both the representative director of bitFlyer Inc. and the JBA. He has taken proactive steps by presenting a comprehensive appeal to the government regarding this matter.
The JBA has put forth an exclusive and original requirement. It entails eliminating year-end taxation on unrealized gains for tokens issued by third parties. Recently, Japan’s National Tax Agency made revisions to select corporate tax regulations. These revisions specifically exclude the mark-to-market valuation of a company’s cryptocurrency holdings.
Therefore, this appeal aims to remove the tax burden at the end of the year on unrealized profits for tokens issued by third parties. This action effectively removes a significant obstacle for domesticcompanies venturing into the Web3 sector.
Additionally, the JBA strongly supports modifying the taxation strategy for individual transactions involving crypto-assets. They propose implementing an independent self-assessment taxation framework that applies a consistent tax rate of 20%.
However, the current taxation system has discouraged some potential investors. However, according to the JBA’s survey findings, many individuals would consider increasing their investments if this proposed taxation approach is implemented.
JBA’s Bid: Tax-Free Crypto Exchanges
The JBA is advocating for the elimination of income taxation on gains derived from exchanging crypto assets. This proposition aims to streamline activities across various applications, including DeFi and NFT markets, with the ultimate goal of making crypto assets more easily accessible and convenient for users.
The JBA’s vision of positioning Japan as a global leader in Web3 technology aligns seamlessly with the proposed tax revisions. They firmly believe that embracing these changes will drive the expansion of the Web3 economic sphere and foster innovation within the nation’s economy.
Detractors argue that widespread endorsement and understanding of crypto assets in Japan are crucial for the successful implementation of tax reforms. Gaku Saito, CEO of pafin Co., Ltd. and chair of JCBA’s tax review committee, emphasizes the significance of generating social momentum and improving people’s lives as vital factors in accomplishing these transformative reforms.
The Japan Crypto-Asset Business Association (JCBA) and JBA have jointly requested tax reform in 2022. They are currently discussing this matter with the Financial Services Agency.
Japan’s potential tax reforms have the power to elevate its global position in the realm of crypto-assets. Anticipated surges in both user engagement and investment are projected to bolster tax revenues significantly.
However, presently situated at the 15th spot in worldwide rankings, Japan aspires to emerge as a prominent player within the Web3 economy, thereby fostering robust economic growth and advancement.
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