The Japanese National Tax Agency has recently eliminated the requirement for token issuers to pay corporate taxes on unrealised gains from cryptocurrencies. The law amendment was made effective from June 2 and comes nearly six months following the Japanese government’s approval of the proposal.
Discussions on new cryptocurrency tax regulations in Japan have been ongoing since last August. The regulations form part of a wider tax reform for 2023. The final approval from the tax authority for the new law for 2023 was only granted this week. Under the revised rules, Japanese firms that issue tokens are now exempt from the standard 30% corporate tax rate on the gains they hold when previously even unrealised gains were subject to taxation.
Cryptocurrency regulation in Japan
The cryptocurrency industry in Japan has been experiencing notable transformations recently. At the beginning of June, Japan started implementing heightened Anti-Money Laundering (AML) laws. This is in a bid to align its legal framework with global crypto regulations. The AML legislation was revised in December following the Financial Action Task Force’s (FATF) assessment of its insufficiency.
Additionally, in June of the previous year, the Japanese government passed a law prohibiting non-banking institutions from issuing stablecoins. The recently implemented bill restricts stablecoin issuance in the country to licensed banks, registered money transfer agents, and trust companies.
Japan has been one of the pioneers in legalising cryptocurrencies as private assets. While the country working to implement strategies to make crypto more accessible to users, its regulatory framework for crypto is considered one of the strictest worldwide. After the hacking incidents involving Mt.Gox and Coincheck, Japan’s financial regulator tightened regulations for crypto exchanges. These local regulations are believed to have facilitated the prompt return of assets to FTX users in Japan following the exchange’s global collapse, in contrast to users in other countries who faced delays in receiving their refunds without a clear deadline.