The finance minister of Japan has discussed the idea of a reduction in the rate of tax paid by cryptocurrency investors, in a move that could further stimulate interest in the nascent sector.
Finance Minister Taro Aso made the comments at a budget committee meeting in the Upper House of the National Diet of Japan, prompted by a question from a senator regarding the current treatment of cryptocurrency gains, Reuters reported.
In particular, the lawmaker questioned whether the treatment of cryptocurrency under existing laws as “miscellaneous” income for capital gains tax purposes was appropriate, and whether a better mechanism for taxing crypto profits could be identified.
In response, Aso didn’t counter the suggestion, and instead offered some insight into how this might be achieved. However, he did highlight a perceived public lack of understanding of the cause, and suggested there may be presentational issues around fairness in the tax system. Nevertheless, the development is being reported as a step towards what many would consider to be an improvement on the law as it currently stands.
At present, capital gains from investing in cryptocurrency are treated as miscellaneous income, which falls under the scope of taxation between 15% and 55% for individuals with earnings over JPY40 million per annum, equivalent to around $365,000.
However, if policy followed the suggested proposals, it would bring crypto gains into a lower, fixed tax bracket of 20%, slashing the tax burden currently paid by cryptocurrency investors across the board. This is the same bracket applied to earnings from other forms of financial trading, such as currency investing and stocks, which some have argued provides a more accurate fit for cryptocurrency investing.
The comments from Aso are even more significant in light of his previous suspicion around the cryptocurrency sector. Following the Coincheck theft, which saw some $530 million stolen from the exchange, Aso was chief amongst those demanding tougher regulation from the country’s financial regulator. This prompted the regulator to issue improvement notices to no fewer than 6 licensed exchanges, in a bid to tighten up the space.