Japan Blockchain Association Seeks Taxation Reform

The Japan Blockchain Association (JBA) is pushing for tax reforms to encourage domestic companies to venture into the thriving Web3 sector, proposing changes that could transform the cryptocurrency landscape in Japan.

The JBA, led by Bitflyer's co-founder and CEO Yuzo Kano, has officially urged the Tokyo government to reconsider the taxation regulations pertaining to virtual currencies.

According to the association, the current tax system hinders the growth of the Web3 business in Japan and discourages citizens from owning and using digital assets.

The JBA highlighted the significance of abolishing the end-of-term unrealized gain tax, as it would allow companies to retain tokens without being forced to sell them for tax purposes.

Currently, selling tokens to meet tax obligations can cause their prices to plummet, potentially hindering the growth of the token-based economy.

Last month, the National Tax Agency (NTA) in Japan introduced adjustments to corporate tax rules to exempt firms from year-end unrealized gains taxation on cryptocurrencies they issued.

However, the JBA insists that this exemption should also apply to unrealized profits from tokens issued by third parties to remove barriers for companies trying to enter the Web3 market.

Furthermore, the JBA proposes separating self-assessment taxation for individual crypto asset transactions with a flat tax rate of 20%.

Additionally, the association suggests allowing losses to be carried forward and deducted within the three years following the year of their occurrence, effectively reducing the overall tax burden.

Drawing on data from the Japan Crypto Asset Trading Association, the JBA emphasized the substantial growth in the number of people opening crypto asset trading accounts in Japan, which reached approximately 6.8 million by April 2023.

The JBA's survey revealed that nearly 44% of respondents would significantly increase their investments if separate self-assessment taxation were implemented.

The JBA also advocates for the elimination of income taxation on profits earned through crypto asset exchanges.