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- 1 Japan is known to have one of the most strict tax regimes on profits after crypto, varying from 5% to 45%.
- 2 The blockchain association asked for immunity on the heavy crypto tax system.
Cryptocurrency markets are evolving with time and continue to expand across the world. Though crypto is not a legal tender in many countries and crypto regulation is one of the hot topics, taxing and profiting out of tax has already started. Japan also holds several taxations over crypto transactions and operations. However, the crypto community in the region looks for exemptions.
JBA Urges Government to Revise Crypto Tax Regime
According to a local media outlet, Japan Blockchain Association (JBA) submitted an application to the government requesting the revision of the crypto assets taxation system. The organization cited the inefficiency of the system affecting the growth of the sector and the growing Web3 development industry.
Japan hosted different taxes according to the operations carried out within the crypto industry. It includes a tax on profits from third-party issued tokens every time a crypto transaction takes place, individual crypto asset transactions, etc.
JBA asked for the elimination or revision of these taxes levied on crypto operations. It conducted a survey which found out that the alteration in taxes would work positively for the sector and investors. More than a third of respondents are ready to double their crypto investments if tax relief would allow.
The National Tax Agency of Japan revised the tax rules for businesses facilitating relief on unrealized gain tax on their own assets.
On the flip side, the third-party-issued tokens still hold the year-end unrealized profit tax. JBA noted that the regime hinders many domestic companies from entering the emerging Web3 space. Citing this blockade, it asked the government to eliminate the tax on third-party-issued tokens as well.
Growing Crypto Users Could Bring More Taxable Revenue
In addition, there are concerns regarding “individual cryptocurrency transactions taxation” and it was requested to transition to a “separate self-assessment tax”. The user base of crypto in Japan is rising considerably. It is noteworthy that several cryptocurrency accounts hit 6.8 Million by April 2023.
About 43.9% of respondents in the survey said to double their investment after the conversion of individual crypto asset transactions to separate self-assessment tax.
Furthermore, the crypto users in the region also have raised issues with the system making them pay taxes on profits after every crypto transaction. The blockchain organization asked for repealing the provision to boost optimism within the community and businesses.
It argued that removing the taxes would increase participation in emerging financial space. With more people and businesses entering the space, the government could have more volume to tax. The losses from the tax exemptions could be covered after the escalation in the number of participants in the industry.
Nancy J. Allen is a crypto enthusiast, with a major in macroeconomics and minor in business statistics. She believes that cryptocurrencies inspire people to be their own banks, and step aside from traditional monetary exchange systems. She is also intrigued by blockchain technology and its functioning. She frequently researches, and posts content on the top altcoins, their theoretical working principles and technical price predictions.
