Japan eases crypto tax requirements to entice fintech companies

Japan’s National Tax Agency published a partial revision of its corporate tax guidelines on 20 June. These include a new set of rules for digital token issuers, eliminating previous taxes on unrealized profits from crypto assets issued by companies.

The new tax rules will “make it easier for cryptocurrency-related companies to do business in Japan,” said industry analyst Colin Wu.

Japan eases corporate crypto taxes

The latest tax exemption follows the approval of a proposal to eliminate the requirement for crypto companies to pay tax on unrealized “paper gains” on tokens issued and held by them.

Japanese fintech firms issuing tokens will be exempt from paying a fixed 30% corporate tax rate on their holdings.

Currently, the laws tax unrealized profits, which has led some companies to move abroad to friendlier jurisdictions.

Although there are still some issues to be addressed in order to make it easier for crypto companies to do business in Japan, “this represents a step forward towards improving the business environment.” informed of local media.

There are two primary conditions for crypto token tax exemption. Tokens must be issued by the Company and held continuously from the time of issue, and transfer restrictions apply.

The crypto community has reacted positively to the latest government move. Sota Watanabe, founder of ASTAR Network (ASTR), which has advocated for this tax amendment, commented (Translation):

“At the moment, those who want to do something like Estar can do so now without leaving the country. I would like to continue constructive discussions with politicians and officials.

He said he wanted to revise the taxation of token holdings issued by other companies “as it hinders the domestic expansion of projects.”

Japan has been implementing stricter AML (anti-money laundering) rules since early June in an effort to conform to Financial Action Task Force (FATF) requirements.

Asia continues to tilt

Japan was one of the first countries to fully legalize and regulate cryptocurrencies, so it remains a popular destination for businesses. Earlier this month, reports emerged that its largest bank could become a stablecoin issuer.

However, Hong Kong and Singapore have emerged as friendlier nations to crypto this year with their own regulations and digital welcome mats.

Meanwhile, the US continues to crack down on the industry, taking legal action against companies that fail to do the impossible – register as securities exchanges.