Starting April next year, Japanese companies will no longer be taxed on "unrealized gains" from their cryptocurrency holdings. This change comes after the Japanese cabinet approved modifications to the country's digital asset tax laws.
Local sources report that the Japanese government announced these new tax reforms on December 22, following a cabinet meeting. The implementation is set for April 1, 2024, aligning with the start of Japan’s fiscal year.
Under the previous tax regime, companies had to report cryptocurrency received from third parties, taxed based on the difference between the market and book values, even if the cryptocurrency wasn't sold. The new system aligns with the tax rules for retail investors in Japan, where businesses will be taxed only on profits made from the actual sale of cryptocurrencies.
The government initially revealed its plans for the 2024 tax reform in a document on December 14. Additionally, the Financial Services Authority of Japan had proposed the elimination of taxes on unrealized cryptocurrency gains as early as August 31. In recent developments, Circle, the company behind USD Coin (USDC), partnered with Tokyo's SBI Holdings to push for stablecoin usage and Web3 services in Japan.
In a related note, Japan’s tax authorities carried out 615 investigations in 2022, uncovering 548 instances of cryptocurrency tax violations, marking a 35% increase from the previous year. However, the average amount of undeclared cryptocurrency holdings decreased by 19%, from 36.5 million yen ($245,000) in 2021 to 30.7 million yen ($206,000) in 2022.
