Japan’s Ruling Party Pushes for Immediate Crypto Tax Reforms: Latest Updates and Analysis

Japan’s ruling party, the Liberal Democratic Party, is pushing for immediate crypto tax reforms, according to a recent report. The party’s web3 project team released a White Paper on April 12, calling for profits and losses from cryptoasset transactions to be subject to separate taxation by self-assessment. This move comes after the government announced plans to allow venture capital firms to invest in domestic crypto companies earlier this year.

Currently, Japanese law requires crypto traders to include their trading profits and losses on their annual income declarations. This has led to varying tax rates for individuals based on their income levels, with some paying as little as 11% and others paying over 50%. In contrast, most other countries tax crypto trading profits as capital gains, similar to stocks and shares.

Prime Minister Fumio Kishida has shown support for the crypto sector, indicating a willingness to reform tax laws and promote NFT-powered economic growth. The recent tax reform for corporations, exempting them from paying tax on unrealized gains, is a step in this direction.

If the Digital Society Promotion unit approves the proposed tax reform for individual traders, it will be passed on to the Political Affairs Research Council and eventually become official Liberal Democratic Party policy. With the ruling party holding a majority in both houses of the National Diet, the chances of these reforms being implemented are high.

Industry insiders in Japan have welcomed the news, with some stating that the White Paper addresses many of their requests for improvement. The proposed changes would not only separate crypto profits taxation from income tax but also allow traders to defer losses for up to three years. The industry is hopeful that these reforms will be implemented in the near future, positioning Japan at the forefront of the web3 revolution.