A Japanese lawmaker has proposed a set of changes to the taxation of virtual currency transactions designed to remove the current barriers to growing trading volumes in Japan. The move is seen as the result of a shift in the direction of travel from lawmakers and regulators, following advice from a committee of tax experts suggesting the existing framework required simplification.
Previously, an analyst suggested the low number of cryptocurrency investors declaring earnings to the government was proof of the ineffectiveness of the system, saying, “If the rapid growth of the cryptocurrency sector in late 2017 is considered, 331 is a number that is simply too low to be true. A large portion of cryptocurrency investors probably did not declare their earnings to the government.”
Now, Japanese lawmaker Takeshi Fujimaki has proposed four major changes to the law, designed to better reflect the volatile nature of speculating on cryptocurrencies. According to Fujimaki, the policy is aimed at increasing the volume of transactions in local virtual currency markets.
“In order to increase the volume of transactions between virtual currencies and to revitalize the virtual currency market, trading between virtual currencies should be tax exempt,” Fujimaki’s website stated.
The proposals suggest slashing crypto gains taxes from 55% to 20%, plus the ability to carry forward losses, potentially into future years, which is not an option at the moment. There would be no tax payable on small currency transactions, nor would any taxes apply to any crypto-to-crypto trade.
The proposals have been welcomed by cryptocurrency traders in Japan, who envisage the net effect as a significant positive for the second largest crypto markets in the world behind the United States.
Should the measures prove successful in rejuvenating the crypto markets in Japan, there is the suggestion that neighboring South Korea could consider similar measures.
One of the world’s most developed crypto markets in its own right, South Korean exchanges and startups could be expected lobby their own government to adopt similar measures, and all eyes will now be on developments in Japan to see how these proposals work in practice.
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