Japan’s Financial Services Agency (FSA) has proposed significant changes to the nation’s tax code. The changes include potential reductions in taxes on crypto assets by 2025.Â
On August 30, the FSA outlined its vision for the upcoming fiscal year. They are urging that authorities tax crypto assets similarly to traditional financial assets. Currently, crypto earnings in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%. Of course, this is depending on the individual’s income bracket. This steep rate applies even to modest earnings, with the highest rate triggered by profits over 200,000 yen ($1,377).Â
Profits from stock trading in Japan are subject to a flat tax rate of 20%, regardless of the amount. Corporate holders of cryptocurrency face a flat 30% tax on their holdings at the end of each financial year. This applies even if they haven’t sold or profited from the assets.Â
The FSA’s proposal is part of a broader tax reform, where government ministries submit their requests to the ruling party. These proposals are then reviewed by the tax system research committee. Both houses of the Japanese government must approve before anything becomes law.Â
Advocates for the crypto industry in Japan have long called for such changes. The Japan Blockchain Association, a key lobbying group, has been pushing for lower crypto tax rates. In 2023, they formally requested a reduction and have continued to advocate for reforms to foster growth in Japan’s crypto sector. Their recent proposal includes a flat 20% tax rate on crypto and the ability to carry over losses for up to three years.Â
Despite these ongoing efforts, Japan’s crypto tax landscape remains unchanged. It leaves many in the industry hopeful but cautious as they await potential reforms in 2025.Â
