Japanese Lawmakers have proposed some changes to Japan’s tax law to benefit crypto users and traders as well as widen the adoption of cryptocurrency in the country. There’s a member of the House of Councillors, the upper house of Japan’s legislature. They made a public proposal to relax tax laws on digital assets to boost growth in the space.
Japan’s Proposed Tax Program
Takeshi Fujimaki, who’s a career banker, made the proposal earlier this December. He made a public statement calling for Japan to ease the burden of taxes on cryptocurrency.
“We will change the virtual currency taxation system to a certain form. To promote the wider penetration of cryptocurrency into society and to encourage the development of blockchain technology,” said Fujimaki.
He also said that they have to be careful that the current tax system doesn’t crush the potential benefits of cryptocurrencies or blockchain. He then proposed a four-step program to make tax laws friendlier to blockchain development.
1. Fujimaki proposed lowering the tax rate on cryptocurrency gains to 20 percent, from the 55 percent rate that applies to most capital gains.
2. Fujimaki’s proposal outlined his support of the regular tax rate while describing this particular circumstance, saying that “if a stable income, like a salary income, is expected, overall taxation application is also rational. But the transaction gains in cryptocurrency are not … Revenues are unstable and there may be years to lose.”
3. A proposed “loss carryforward deduction.” That means people could continue to write major losses off of their taxes, even if they made a profit in the subsequent year.
4. Fujimaki proposed that small amount of cryptocurrency settlement should be tax exempt as that would result in the expansion of cryptocurrency settlements in the real world.
Japan’s national tax authority currently levies anywhere between 15 percent to a staggering 55 percent in taxes for cryptocurrency investors. Individuals with annual earnings above 40 million yen ($365,000) see the highest tax slab.
Crypto Regulation in Japan
Japan’s relationship with crypto exchanges hasn’t been smooth over the past years. Although there are some blockchain startups based in Japan. The financial regulators in the country have often toughened restrictions on cryptocurrency exchanges.
Earlier this year, Japan’s Financial Services Agency – the country’s financial regulator and watchdog – ordered about six licensed exchanges to rehaul and improve their management systems with a specific focus on risks and ID verification procedures.
The regulator’s increased oversight. Also, scrutiny into exchanges after $530 million theft of NEM tokens from Tokyo exchange Coincheck in January.
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