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FameEX Hot Topics | Japan Eliminates Corporate Tax on Unrealized Gains from Cryptocurrency
2023-12-25 17:02:35
Japanese corporations are set to experience a significant change in how they are taxed on their cryptocurrency holdings. Until now, they were required to pay taxes on paper gains from their crypto assets, but starting April next year, this requirement will be lifted.
According to recent local reports, the Japanese government announced a major revision to the national tax regime for digital assets on December 22, following a cabinet meeting. This reform, which is scheduled to come into effect on April 1, 2024 – the beginning of Japan's fiscal year – marks a notable shift in the country's approach to cryptocurrency taxation. Under the previous system, corporations in Japan were obliged to declare cryptocurrencies received from third parties. This declaration was based on the difference between the market value and the book value of the assets, irrespective of whether the cryptocurrency was sold or not. However, with the new changes, corporations will now only need to pay taxes on profits made from the actual sale of cryptocurrencies. This aligns corporate cryptocurrency tax obligations more closely with the existing tax laws applicable to retail investors in Japan. The details of this tax reform were first outlined in a document released by the government on December 14. But the groundwork for this change was laid earlier when the country’s Financial Services Agency submitted a proposal to abolish taxes on unrealized cryptocurrency profits on August 31. This easing of tax regulations is seen as a potential catalyst for more companies in Japan to engage in Web3 and related digital asset ventures. By removing the burden of taxation on unrealized gains, the Japanese government is creating a more conducive environment for businesses to explore and invest in the burgeoning field of cryptocurrency and blockchain technology. The move is indicative of Japan's evolving stance towards digital assets and reflects a growing recognition of the unique characteristics of cryptocurrencies. It also positions Japan as a potentially more attractive destination for crypto-related businesses and investments. As the country adapts its financial regulations to keep pace with the rapidly changing digital landscape, these changes could have far-reaching implications for the broader crypto market and the Japanese economy. Disclaimer: The information provided in this section is for informational purposes only, doesn't represent any investment advice or FameEX's official view.
