Japan’s leading crypto lobby groups plan to submit a proposal to Japan’s financial regulatory body to address its high crypto taxes, which experts warn make Japan less competitive as a crypto hub.
According to an internal memo seen by Bloomberg, the proposal will be submitted to Japan’s Financial Services Agency (FSA) this week, asking them to put an end to taxing unrealized gains on crypto holdings “if the firm owns them for purposes other than short-term trades.”
The proposal also asks for the financial regulator to lower income tax rates on crypto earnings for individual investors to 20%, which is far less than the current rates that see some investors being taxed as high as 55%.
Head of Tax (APAC region) Danny Talwar from crypto tax platform Koinly told Cointelegraph that the current regulatory environment makes it difficult for businesses and individual investors to hold digital assets in Japan compared to more crypto-friendly nations:
“The high crypto tax rates make Japan less competitive on the international front compared to countries like Singapore and Dubai, which are increasingly becoming digital asset hubs for business.”
Talwar also said that the taxation of unrealized capital gains could lead to situations where taxes paid are not commensurate with the asset value on realization, and this is particularly common for volatile asset classes.
Talwar added that the acceptance of the proposals by the FSA would be a “step forward for crypto-friendly regulation” in Japan, though the exact contents of the proposal are not yet known.
As for regulation, Talwar acknowledged “it should not stifle innovation in this fast-growing industry.” But before doing so, it is important that lawmakers have a clear understanding of how the taxation of digital-assets fits within the current tax regimes and regulatory frameworks, he said.
Speaking to Bloomberg, Web3 infrastructure protocol Stake Technologies CEO Sota Watanabe said the current corporate tax rate was too high, making Japan “an impossible place to do business.”
“Japan is an impossible place to do business… the global battle for a Web 3.0 hegemony is under way, and yet, Japan isn’t even at the start line”.
Watanabe is one of several CEOs who relocated their crypto companies to Singapore, citing high taxes as one of the reasons for the transition.
Related: South Korea postpones 20% tax on crypto gains to 2025
Japanese politician Masaaki Taira also argued that lawmakers need to relax crypto regulations to “stem the outflow of digital talent”.
The proposal is reportedly being prepared by the The Japan Cryptoasset Business Association (JCBA) and the Japan Virtual & Crypto Assets Exchange Association (JVCAEA), whose members are made up of crypto firms including Bitcoin Association and forex broker WikiFX.
source link : https://cointelegraph.com/news/japan-s-crypto-groups-call-for-end-of-taxing-paper-gains
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