The Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA), the two prominent cryptocurrency advocacy groups in Japan, have released a tax reform request calling for a reduction in taxes for individual investors on crypto profits.
The 2023 tax reform petition addressed key issues that advocacy groups believe are acting as a barrier to cryptocurrency adoption in the country. The proposal focused on the need to improve the individual tax filing environment, the importance of crypto-assets in Japan’s web3 strategy, and a comparison with crypto-asset taxation systems abroad.
The proposal calls for a separate 20% tax on individual crypto investors with provisions to carry forward losses for three years from next year. The proposal also calls for the same tax structure to be applied to the crypto derivatives market.
The separate 20% tax on crypto profits with exemption of unrealized gains will prove to be a big relief for crypto investors in Japan who currently face taxes of up to 55% on their crypto investments.
The tax reform proposal comes just a week after Cointelegraph reported on an internal memo on crypto tax reforms to be submitted to Japan’s Financial Services Agency (FSA).
Related: Half of Asia’s wealthy investors have crypto in their portfolio
Japanese crypto groups are working to ensure that the crypto industry thrives in the country with a particular focus on tax reforms. These crypto lobby groups believe that a high tax rate would make it harder for businesses and individual investors to hold digital assets in Japan compared to more cryptocurrency-friendly countries.
Crypto taxes have been the focus of many governments around the world this year, with many countries implementing high taxes while others have moved to abolish or delay them due to a lack of clear regulations. India imposed a 30% tax on crypto profits in April this year, while Thailand scrapped its proposal for a 15% crypto tax and even exempted merchants from the 7% VAT to encourage cryptocurrency adoption in the country. Similarly, South Korea has postponed its proposed 20% cryptocurrency tax policy until 2025.