The Japan Blockchain Association (JBA), a non-governmental lobby group advocating for the cryptocurrency industry in Japan, has presented a formal request to the country's government, urging changes to the national taxation system for digital assets. The request, posted on the asso ciation's website on July 28, emphasizes that the taxation of crypto-assets is the primary obstacle hindering Web3 businesses in Japan and preventing citizens from actively participating in owning and using digital assets. To address these concerns, the JBA proposes three maj or changes that could alleviate the financial burden on cryptocurrency holders.
The first proposal is the abolition of year-end unrealized gains tax for companies holding crypto assets. This tax applies to profits recorded in accounting books but not yet realized through transactions. JBA aims to eliminate the tax on unrealized gains resulting from token issuance by third parties. In June, Japan's National Tax Agency already exempted local companies from taxing year-end unrealized gains on cryptocurrencies they issue.
The second request focuses on the taxation of individual crypto asset transactions. JBA suggests shifting from the current comprehensive tax to a self-assessment itemized tax method, with a unified tax rate of 20%. Additionally, they propose a three-year period during which losses from the devaluation of digital assets can be deducted.
The third and final request calls for the abolition of income tax on profits earned by individuals from exchanging crypto assets. The association points out that in the borderless Web3 era, crypto asset exchanges are likely to become mainstream economic activities, leading to complex and challenging tax calculations due to the variety of transactions and assets involved.
Japanese Prime Minister Fumio Kishida reaffirmed the country's commitment to fostering the Web3 industry at the end of July, recognizing its potential to revolutionize the internet and drive social change. On the same day, Binance CEO Changpeng Zhao announced the launch of the cryptocurrency exchange's services on a new Japanese platform in August. However, as of press time, the JBA has not responded to Cointelegraph's request for comment on their proposed changes to the taxation system.
