The tax administration of Japan has provided an exemption to companies issuing cryptocurrencies under a revision of the corporate tax rules. A local crypto media report described the move as a step toward improving the business environment for the digital asset sector in the country.
Japan Tax Authority Gives Cryptocurrency Businesses a Tax Exemption
Japan’s National Tax Agency (NTA) has issued a notice clarifying partial revisions to the country’s corporate tax regulations. Under the new rules, unrealized gains from cryptocurrencies issued by companies will no longer be taxed.
The administration explained that such coins will be excluded from the market value evaluation of a company’s assets if certain conditions are met. While a number of other issues need to be addressed, the move can improve the business environment for companies working with cryptocurrencies, Japanese crypto news outlet Coinspot noted in a report.
Under the current Japanese law, if a company holds crypto assets, they will be taxed as unrealized gains at the end of a tax period. The rule puts a burden on crypto companies and hinders blockchain innovation, causing some of these entities to relocate overseas, many have pointed out.
With the revision, the rules for taxing company-issued digital currencies have been relaxed. This comes after a long-time push in that direction, the article points out. The revision was also included in the ruling party’s tax reform plan for the fiscal year 2023.
To benefit from the new tax exemption, a company must be the issuer of the cryptocurrency in question and hold it continuously after the issuance while the crypto asset is subject to transfer restrictions, the report highlighted.
The Japanese crypto community welcomed the change as something that will keep crypto companies home. However, some of its members, like the founder of the decentralized blockchain platform Astar Network, Sota Watanabe, insisted that the tax relief should also apply to holdings of tokens issued by other companies to allow for the expansion of domestic projects.
Do you think the revised tax rules will convince more crypto companies to remain in Japan? Share your thoughts on the subject in the comments section below.