The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA), two prominent digital assets self-regulatory and lobby groups, have released a joint proposal to have the country’s digital assets tax regime reformed.
The groups are pushing several demands that they believe will remove hindrances to digital asset adoption in Japan. In the request, they called for the Financial Services Agency (FSA) to make it cheaper for companies to issue and hold digital currency tokens and improve the individual tax filing environment.
Specifically, they asked that Japan’s practice of taxing unrealized gains be removed, while a uniform 20% tax regime with exemptions to allow for unrealized gains to be carried forward should be introduced for individual investors. The bodies argue that this would be a big relief for digital asset investors who currently pay up to 55% tax rates.
The bodies are pushing to have the proposal on the table when Japan opens its 2023 tax reform debates, usually at the beginning of summer. The bodies also highlight that adopting the proposal will reinforce Prime Minister Fumio Kishida’s goal to make Japan a global Web 3.0 hotbed and keep businesses from leaving.
“If the Japanese government makes Web 3.0 a national strategy, the frequency with which the public will come into contact with crypto-assets will inevitably increase dramatically… making it easier to hold will lead to the spread of Web 3.0 and contribute to the development of the market,” the request said.
Japan’s digital assets self-regulatory bodies determined for the industry to thrive
Japan had its current tax regime in place since 2018, when it first gave recognition to the industry’s self-regulatory bodies. Since then, it has also tweaked reporting requirements to ensure that there are no loopholes for digital asset investors to evade taxes.
JCBA and JVCEA have been working on the request for a while. Bloomberg first disclosed plans to submit the request after being privy to an internal memo from the agencies last week. The bodies also compared Japan’s digital assets tax regime to that of other more friendly countries.
The lobby groups have also been working to make the industry gain more footing. The JVCEA, which is tasked with overseeing the operations of digital assets exchanges, has proposed to review its digital assets listing screening process to make it less time-consuming.
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