CryptoNews

Japan Mulls Exempting Companies From Paying Taxes on Unrealized Cryptocurrency Gains

Japan is considering exempting corporations from paying unrealized gains income taxes related to cryptocurrency holdings. The measure, proposed as part of a reform in Japan’s tax code, would allow companies to avoid paying taxes for cryptocurrencies even if their market value changes during each fiscal year.

Japan to Stop Taxing Corporations for Unrealized Cryptocurrency Gains

The Japanese government is about to overhaul its tax code, improving the regime for companies holding crypto long-term. A new consideration in the tax code discussed by policymakers and slated to be part of the 2024 tax reform establishes that cryptocurrency holdings of corporations would not be taxed for unrealized gains.

Currently, Japan taxes the cryptocurrency holdings of corporations by taking market prices at the start and the end of each fiscal year as a reference, something that has been widely criticized as detrimental for companies holding these assets. The approval of this proposal would mean that companies holding these assets in foreign countries — like Singapore, Dubai, and Switzerland — could bring their crypto holdings to Japan. However, this would mean that the Japanese government would also lose part of the tax collected from companies, taking an undetermined hit.

Nikkei Japan clarifies this would only apply to cryptocurrencies being held as part of companies’ property and not used for short-term trading purposes.

The Japan Blockchain Association called for these changes in June, stating that the tax regime was hindering the growth of Web3 in the country and causing market instability due to the need for companies to sell part of their currencies to pay the corresponding taxes.

Japan has been progressing in the cryptocurrency taxation field, having lifted another tax on cryptocurrencies self-issued by companies in June. Before, companies had to pay taxes on unrealized gains for cryptocurrencies they themselves issued. However, this measure was lifted, opening Japan for companies that want to issue, or have issued, such currencies.

What do you think about the possible change in Japan’s cryptocurrency tax regime? Tell us in the comments section below.

Source: Bitcoin

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