Japan’s leading crypto lobby groups plan to submit a proposal to
Japan’s financial regulatory body to address its high crypto taxes,
which experts warn make Japan less competitive as a crypto hub.
According to an internal memo seen by Bloomberg,
the proposal will be submitted to Japan’s Financial Services Agency
(FSA) this week, asking them to put an end to taxing unrealized gains on
crypto holdings “if the firm owns them for purposes other than
short-term trades.”
The proposal also asks for the financial
regulator to lower income tax rates on crypto earnings for individual
investors to 20%, which is far less than the current rates that see some
investors being taxed as high as 55%.
Head of Tax (APAC region) Danny Talwar from crypto tax platform Koinly
told Cointelegraph that the current regulatory environment makes it
difficult for businesses and individual investors to hold digital assets
in Japan compared to more crypto-friendly nations:
“The
high crypto tax rates make Japan less competitive on the international
front compared to countries like Singapore and Dubai, which are
increasingly becoming digital asset hubs for business.”
Talwar
also said that the taxation of unrealized capital gains could lead to
situations where taxes paid are not commensurate with the asset value on
realization, and this is particularly common for volatile asset
classes.
Talwar added that the acceptance of the proposals by the
FSA would be a “step forward for crypto-friendly regulation” in Japan,
though the exact contents of the proposal are not yet known.
As
for regulation, Talwar acknowledged “it should not stifle innovation in
this fast-growing industry.” But before doing so, it is important that
lawmakers have a clear understanding of how the taxation of
digital-assets fits within the current tax regimes and regulatory
frameworks, he said.
Speaking to Bloomberg, Web3 infrastructure
protocol Stake Technologies CEO Sota Watanabe said the current corporate
tax rate was too high, making Japan “an impossible place to do
business.”
“Japan is an impossible place to do business…
the global battle for a Web 3.0 hegemony is under way, and yet, Japan
isn’t even at the start line”.
Watanabe is one of several
CEOs who relocated their crypto companies to Singapore, citing high
taxes as one of the reasons for the transition.
Related: South Korea postpones 20% tax on crypto gains to 2025
Japanese
politician Masaaki Taira also argued that lawmakers need to relax
crypto regulations to “stem the outflow of digital talent”.
The
proposal is reportedly being prepared by the The Japan Cryptoasset
Business Association (JCBA) and the Japan Virtual & Crypto Assets
Exchange Association (JVCAEA), whose members are made up of crypto firms
including Bitcoin Association and forex broker WikiFX.
source link : https://cointelegraph.com/news/japan-s-crypto-groups-call-for-end-of-taxing-paper-gains
