July 21, 2024
Japan's FSA Advocates Tax Law Changes to Regulate Cryptos
Policy & Regulation

Japan’s FSA Advocates Tax Law Changes to Regulate Cryptos

The Financial Services Agency (FSA), Japan’s top financial watchdog, has decided to regulate cryptocurrencies on its own by advocating for changes to the country’s tax laws governing digital assets.

Local media reports state that the FSA applied on August 31. The 16-page document’s most prominent recommendation is an effort to exempt domestic businesses from the year-end “unrealized gains” tax on cryptocurrencies. In certain national laws, legal entities are only required to pay taxes after selling their crypto assets for fiat, while in Japan, they must pay taxes on a regular monthly basis.

Given that the Ministry of Economy, Trade, and Industry has previously endorsed the FSA’s amendment proposal, it may be approved.

The change will “improve the environment for the promotion of Web3 and promote business start-ups that use blockchain technology,” the FSA states in its announcement.

For a while now, proponents of the cryptocurrency sector in Japan have called for a modification of the country’s tax laws regarding digital assets. A non-governmental organization called the Japan Blockchain Association (JBA) requested the Japanese government make three significant adjustments to cryptocurrency law at the end of July.

First, corporations owning crypto assets had their end-of-year unrealized profits tax eliminated. The other two are doing away with income tax on earnings made from individual cryptocurrency asset trading in favour of self-evaluation independent taxation with a standard tax rate of 20% and abolishing income tax on profits made from individual crypto asset exchanges.

Image: Freepik

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