The Japanese government has reportedly ended the imposition of a tax on unrealized profits on crypto assets owned by companies, local media outlet CoinPost reported.
At a December 22 cabinet meeting, authorities reportedly approved the halt to taxing companies for unrealized profits arising from third-party issued cryptocurrencies. This policy change is expected to come into effect on April 1, 2024, which marks the start of Japan’s fiscal year.
Under the new regime, companies will only be taxed if they sell their crypto assets, a shift from the previous system in which taxes were levied based on the difference between the market value and book value of assets sold at the end of each financial year. arrested.
The amendment significantly reduces the tax burden for companies that manage and hold crypto assets. Consequently, it is expected to attract more institutional investors to the Japanese crypto landscape.
Furthermore, it would promote greater adoption of Web3 technology, support local startups and attract foreign crypto ventures to the country.
However, the proposed revision must still be submitted to a regular parliamentary session in January 2024 and approved by the country’s lawmakers.
The decision to withdraw the tax liability follows a request from the Japan Crypto Asset Business Association (JCBA).
JCBA is also calling for a reduced tax rate on crypto-to-cash conversions, and is proposing a flat-rate tax for traders looking to convert their crypto assets into cash. In addition, the association recommends deductions for transfer taxes applied to profits and losses.
These changes in tax policy indicate a significant shift in Japan’s approach to regulating crypto assets. The Asian country aims to create a more favorable environment for crypto-related businesses while balancing tax requirements.
Japan is one of the few countries that has strict crypto regulations. The regulatory framework was critical to protect FTX Japan customer funds from the parent company’s bankruptcy.