Japanese National Tax Agency revision Earlier this week, corporate tax rules for cryptocurrency issuers were announced. The revised rule exempts crypto token issuers from paying corporate tax on unrealized gains on assets held.
According to local news, the exemption applies under two conditions. report. First, tokens must be issued by the company itself and held continuously after issuance. Second, the token must be subject to “transfer restrictions” from the time of issuance.
Japan’s Liberal Democratic Party (LDP) tax commission approved the bill in December 2022, and it was included in the ruling party’s tax reform outline for fiscal 2023, with final approval from tax authorities this week.
Prior to the amendment, token issuers were required to pay a 35% tax on unrealized gains on their tokens if the tokens were listed on the public market. At the end of the taxable period, the property held was taxed.
This high tax imposed an unfair burden on cryptocurrency companies, who had to pay taxes on their paper profits. Since the assets held have not been sold, no taxable gains have been realized. In other words, companies had to pay taxes on profits they didn’t actually make. Thus, this tax caused an exodus of cryptocurrency founders from Japan.
The relaxation of corporate tax is a step towards easing the business environment for Japanese cryptocurrency companies. Sota Watanabe, founder of Japan-based Astar Network, has been an outspoken advocate for tax cuts for cryptocurrency companies. Said Recent revisions will help stem the population exodus.
Watanabe said he will continue to work with regulators and politicians to introduce a more favorable tax system for Japanese cryptocurrency companies. he added:
“Next, we would like to do something about the end-of-year taxation when holding tokens issued by other companies as a corporation, as it hinders the domestic development of projects and domestic projects.”
Although current tax reforms have provided relief, crypto companies still have to pay taxes on the paper profits they make from holding tokens issued by other companies.
The article that Japanese token issuers are exempt from corporate tax on unrealized gains was first published on CryptoSlate.