The Japanese finance minister has said he may not be willing to support new legislation which is set to treat digital currency income like stock dividends.
Taro Aso said he would be unwilling to push for taxes on digital currency-related income to be reduced to 20%, citing reasons of a lack of accessibility to digital currency investments for many households in the country.
The remarks came during a meeting of the House of Councillors Committee on Financial Affairs earlier today, in response to a question from a leading member of the Japan Restoration Association.
Suggesting it would be difficult to tempt householders away from liquid cash savings in the country, Aso said there was no benefit in reducing the tax rate: “Out of 1900 trillion yen [17.6 billion USD] financial assets held by households in Japan, around 900 trillion yen [8.4 billion USD] is now being held as cash deposits and that is abnormal.”
Under current legislation, various types of digital currency income are taxed as miscellaneous income, attracting a rate of as much of 55%. This compares to a flat rate of 20% for income related to stocks, with some legislators keen to equalize the tax treatment.
The reluctance of the finance minister to support the tax changes undermines the prospect of a change in the law, which many in the digital currency sector have been lobbying for.
In his remarks, Aso also spoke about the definition of digital currency in law. The introduction of the Payment Services Act in Japan has seen all references in law to ‘virtual currency’ replaced by ‘crypto asset’, reflecting the decision to change how digital currency business is defined in the country.
In place of “crypto asset”, Aso suggested the Japanese word for ‘stablecoin’, angō shisan, might be a more suitable alternative: “The word ‘crypto’ sounds a bit shady so why don’t we use the Japanese word for stablecoin? […] Sounds more stable right?”
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