It has been just reported that Japan is trying to make some pretty important moves in the crypto space for companies. Check out the latest reports about this below.
Japan makes moves in the crypto space
According to recent reports from local media outlets, the Japanese government has approved a tax regime revision that aims to exempt corporations from paying taxes on unrealized cryptocurrency gains if they hold the assets for a longer period of time.
The revision, which was approved by the cabinet on Friday, only applies to companies that own cryptocurrencies issued by third parties.
Nikkei and CoinPost were among the news outlets that reported on the development.
According to a media report, currently, when corporations hold third-party-issued cryptocurrencies, any increase or decrease in their value at the end of the fiscal year is regarded as profits or losses respectively.
However, a revision is being proposed that would change this valuation method for long-term assets.
Under the new proposal, companies would only be taxed on profits generated from the sale of cryptocurrencies, and not on any mark-to-market valuation changes that occur during the holding period.
According to the online publication The Block, a proposed revision for the fiscal year 2024 still needs to be submitted to a regular Diet session set in January 2024 and approved by the Lower House and the Upper House.
“Holdings of [crypto] assets issued by other companies that are considered short-term holdings will continue to be subject to year-end unrealized gains taxation,” Daiki Moriyama, director of Japan- and Singapore-based gaming blockchain builder Oasys, told The Block.
“The fact that the Japanese government has demonstrated its willingness to grow Web3 business by enacting tax reform for the second year in a row is extremely important to all Web3 business stakeholders around the world,” Moriyama said.
In June, the country’s tax agency clarified that crypto issuers are no longer required to pay the capital gains tax of around 35% on unrealized gains, which may lead to a potential change in the tax regime.
