Cryptocurrency

Future

Gains

<p><strong>The National Tax Agency of Japan announced that unrealized gains from cryptocurrencies issued by companies themselves will no longer be taxed.</strong></p> 
<h2 style="text-align: center;" id="improving-the-cryptocurrency-business-environment">Improving the Cryptocurrency Business Environment</h2> 
<p>The National Tax Agency of Japan <a href="https://coinpost.jp/?p=469277" target="_blank" rel="noopener">recently announced partial revisions</a> to corporate tax rules, aiming to enhance the environment for cryptocurrency-related businesses. These revisions exclude crypto assets (virtual currencies) issued by companies from market value evaluation, provided certain conditions are met. Although there are still unresolved issues concerning the ease of conducting cryptocurrency business in Japan, this represents a positive step towards improving the overall business environment.</p> 
<h2 style="text-align: center;" id="exclusion-of-self-issued-virtual-currencies-from-market-valuation">Exclusion of Self-Issued Virtual Currencies from Market Valuation</h2> 
<p>The exclusion of self-issued virtual currencies from market valuation has been under consideration for some time. This revision is also included in the “ruling party tax reform outline” for fiscal year 2023. The National Tax Agency has now formally announced the exemption through a notification.</p> 
<blockquote class="twitter-tweet"> 
 <p dir="ltr" lang="en">Breaking: Japan Crypto Tax Laws Remove Unrealized Gains Tax for Native Tokens <a href="https://twitter.com/hashtag/Jasmy?src=hash&amp;ref_src=twsrc%5Etfw">#Jasmy</a></p> 
 <p>“According to previous laws, if a company holds virtual currency, it will be taxed on the unrealized profit at the end of the term. It has been pointed out for a long time that this rule is a… <a href="https://t.co/uyzxoUbIof">pic.twitter.com/uyzxoUbIof</a></p> 
 <p>— JasmyUS (@JasmyUS) <a href="https://twitter.com/JasmyUS/status/1672806732047978496?ref_src=twsrc%5Etfw">June 25, 2023</a></p>
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<p><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></p> 
<h2 style="text-align: center;" id="current-taxation-burden-and-impediments-to-innovation">Current Taxation Burden and Impediments to Innovation</h2> 
<p>Under the current law, companies holding cryptocurrencies are taxed on unrealized gains at the end of the period. This rule has long been criticized for burdening companies and impeding innovation in the field of cryptocurrencies and blockchains. Consequently, some companies have chosen to conduct their business overseas due to this Japanese law. With these revisions, the regulations concerning self-issued virtual currencies have been officially relaxed.</p> 
<h2 style="text-align: center;" id="conditions-for-exemption-from-market-valuation">Conditions for Exemption from Market Valuation</h2> 
<p>To be exempt from market valuation, two main conditions must be met. Firstly, the cryptocurrency must be issued by the company and continuously held since its issuance. Secondly, the virtual currency must have transfer restrictions in place from the time of issuance, implemented as technical measures to prevent transfers to other individuals.</p> 
<h2 style="text-align: center;" id="future-developments">Future Developments</h2> 
<p>The notification from the National Tax Agency has received positive responses from the Japanese community and those involved in <a href="https://walletinvestor.com/magazine/japan-blockchain-week-2023-supported-by-ministry-of-economy-trade-and-industry-in-japan" target="_blank" rel="noopener">cryptocurrency-related businesses</a>. Sota Watanabe, the founder of Aster Network (ASTR), who has actively advocated for the revision of this rule, expressed his satisfaction with the announcement. However, it should be noted that this rule revision solely applies to virtual currencies issued by the company itself. Concerning corporate tax, challenges persist for cryptocurrencies issued by other companies.</p> 
<p>Masaaki Taira, a lawmaker from the Liberal Democratic Party and chairman of the web3 project team, also provided comments on this matter. The web3 project team proposes not only revisions to the corporate tax law but also the inclusion of profits and losses related to virtual currency transactions in separate self-assessment taxation.</p> 
<blockquote class="twitter-tweet"> 
 <p dir="ltr" lang="ja">いわゆる「渡辺創太問題（web3人材シンガポール移住促進税制）」はなんとか解決。次は他社発行トークンで短期売買を目的としないアライアンス系ガバナンストークンの時価評価を外す件。</p> 
 <p>※ちなみに渡辺創太<a href="https://twitter.com/Sota_Web3?ref_src=twsrc%5Etfw">@Sota_Web3</a> 問題は、渡辺創太さんに問題がある訳ではなく、日本の税制の問題です。念のため。 <a href="https://t.co/NchwotNIeD">https://t.co/NchwotNIeD</a></p> 
 <p>— 平将明（たいらまさあき/Taira Masaaki） (@TAIRAMASAAKI) <a href="https://twitter.com/TAIRAMASAAKI/status/1672256482895867904?ref_src=twsrc%5Etfw">June 23, 2023</a></p>
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<h2 style="text-align: center;" id="conclusion">Conclusion</h2> 
<p>The rule revision represents a significant relaxation specifically for in-house issued virtual currencies. The existing tax law, which imposes taxes on unrealized profits, has been criticized for hindering innovation and imposing burdens on companies. Some businesses have opted to operate overseas due to these constraints. With these revisions, the rules for in-house issued virtual currencies will officially be relaxed, bringing potential benefits to cryptocurrency-related companies.</p>

Japan Lifts Crypto Tax Burdens for Companies

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