A recent revision in the law by the National Tax Agency in Japan brings good news for token issuers. They are now exempt from paying corporate taxes on the unrealized gains from their cryptocurrency holdings.
This exemption comes into effect after the Japanese government approved a proposal six months ago to eliminate the tax requirement on paper gains for crypto firms.
The discussion on new crypto tax regulations has been ongoing in Japan since August of last year, as part of a broader tax reform initiative for 2023. However, it was only this week that the tax authority finally granted its official approval.
Under the newly implemented rules, Japanese companies that issue tokens are no longer obligated to pay the standard 30% corporate tax on their holdings. Prior to this law, even unrealized gains were subject to taxation.
The ruling Liberal Democratic Party anticipates that these changes will facilitate business activities involving token issuance, making it more accessible for a diverse range of companies.
In recent times, significant transformations have taken place in Japan’s cryptocurrency industry.
As of June 1, the country has implemented more rigorous Anti-Money Laundering (AML) measures to track cryptocurrency transactions, aligning its legal framework with global crypto regulations.
Lawmakers made amendments to the AML legislation in December after it was determined to be insufficient according to the standards set by the Financial Action Task Force.
Furthermore, in June of the previous year, the government passed a law that prohibited non-banking institutions from issuing stablecoins. The legislation, which was recently enforced, specifies that only licensed banks, registered money transfer agents, and trust companies are permitted to issue stablecoins within the country.
Japan holds the distinction of being one of the first nations to legalize cryptocurrencies as private assets, and its regulatory framework for cryptocurrencies is among the most stringent worldwide.
Following the hacking incidents involving Mt. Gox and Coincheck, Japan’s financial regulatory body tightened regulations concerning crypto exchanges.
These local regulations are believed to have facilitated the expeditious return of assets to FTX users in Japan after the exchange’s global collapse, in contrast to users in other countries where the refund process lacked a clear deadline.