Japan’s Government Abolishes Crypto Tax on Unrealized Corporate Gains
Japan‘s cabinet has recently approved a key change in the fiscal 2024 tax policy, removing the tax on unrealized gains for corporate-held crypto assets, according to Nikkei.
In the fiscal 2024 tax reform approved by the Japanese cabinet, the tax on unrealized gains from crypto assets held by corporations will no longer apply. This shift, reported by Nikkei, changes the previous policy where corporate-held crypto assets were subject to tax based on their market value at the end of the fiscal year, regardless of whether these assets were sold or held.
Under the new tax regime, corporations in Japan will now only be taxed on profits actually gained from the actual sale of their crypto assets. This amendment aligns the corporate tax treatment with that of individual investors, who are already taxed only on realized gains.
The tax reform also takes an important step towards establishing separate taxation for crypto transactions. This approach includes introducing specific tax rates and loss carryover deductions for crypto asset dealings.
The Japanese Crypto Asset Business Association (JCBA) has been a vocal proponent of these changes, advocating for a more equitable and growth-oriented tax environment for digital assets.
The JCBA has suggested several measures, such as exempting tax on crypto-to-crypto exchanges and imposing a lump-sum tax when converting crypto assets into legal currency. They have also proposed the introduction of a carry-over deduction for three years.
The recent developments in the U.S. surrounding the Moore v. U.S. Supreme Court case present a contrasting picture to Japan’s approach to cryptocurrency taxation. In the case, the dispute centers around the definition of “realized income” and whether unrealized
