Japanese Crypto Industry Urges Tokyo to Reform Tax Laws

cryptonews.com:

Japanese cryptoasset-related firms have urged the government to make tax reforms – claiming that the current system is out of sync with tax rules in other countries.

The proposals come from the Japan Cryptoasset Business Association (JCBA) and the Japan Virtual Currency Exchange Association (JVCEA), which, per CoinPost, released a joint report calling for tax reform in 2023.

The bodies also addressed the press and spelled out their aims, which chiefly centered on the need to simplify the crypto tax filing process. It also pointed out “inconsistencies” within the existing system. And, as well as noting that Japan’s policy is out of step with “overseas cryptoasset tax systems,” the bodies insisted that crypto has a key role to play in the world of Web3.

The latter point may well catch the eye of senior lawmakers in the ruling Liberal Democratic Party (LDP), which has launched a Web3 taskforce. The taskforce, too, has spoken of the need to reconsider Japan’s crypto tax rules – amid claims that overly restrictive protocols are forcing companies, talent, and capital abroad. Opposition leaders have also become vocal in their own calls for change.

The crux of the issue is that crypto is currently classified as “other income” in tax declarations. This is quite unlike the picture in other countries, where crypto is usually subject to capital gains tax rules. In many nations, crypto-related profits are not taxed at all until coins are converted to fiat.

But in Japan (and under current rules), the rate at which crypto-related income is taxed depends on the total income of an individual. This means that crypto tax payments – in the case of higher earners – can rise to around 50%.

Foreign exchange trading, by contrast, is subject to a flat