Token issuers in Japan will no longer be required to pay corporate taxes on unrealized cryptocurrency gains, thanks to a recent law revision by the National Tax Agency.
The tax exemption, which was approved by the Japanese government nearly six months ago, eliminates the obligation for crypto firms to pay taxes on paper gains from tokens they issued and held.
The discussion surrounding new crypto tax rules in Japan began in August of the previous year as part of broader tax reforms for 2023.
However, the final approval from the tax authority was only granted this week. Under the revised rules, Japanese companies issuing tokens are exempt from the standard 30% corporate tax rate on their holdings.
Prior to this law, even unrealized gains were subject to taxation.
The ruling Liberal Democratic Party aims to simplify business operations related to token issuance with the implementation of these tax exemptions.
This move is expected to make it easier for various companies to engage in token-related activities.
The cryptocurrency industry in Japan has experienced significant transformations recently.
As of June 1, the country has been enforcing stricter Anti-Money Laundering (AML) measures to align its legal framework with global crypto regulations.
The AML legislation was revised in December after the Financial Action Task Force deemed it insufficient.
In addition, the government passed legislation in June of the previous year prohibiting non-banking institutions from issuing stablecoins.
The new bill, which came into effect a few weeks ago, limits stablecoin issuance to licensed banks, registered money transfer agents, and trust companies.
Japan has been at the forefront of crypto legalization, considering it as a form of private asset, and its regulatory framework for cryptocurrencies is one of the strictest globally.
Following major hacks on exchanges like Mt. Gox and Coincheck, Japan’s financial regulator tightened rules for crypto exchanges.
These local regulations are believed to have facilitated the prompt return of assets to FTX users in Japan after the exchange’s global collapse, in contrast to users in other countries who did not have a clear refund deadline.
Overall, Japan continues to make significant strides in shaping its crypto industry through regulatory measures, ensuring both security and compliance in the rapidly evolving digital asset landscape.
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