Japan Announces Plans Exempt Firms Issuing Cryptocurrencies From A 30% Tax On Paper-Only Gains
Japan’s ruling Liberal Democratic Party is moving ahead with plans to make the country a more attractive place for crypto companies to set up shop.
A proposal to exempt crypto-issuers, or businesses creating cryptocurrency platforms and technology, from the 30% tax on unrealized cryptocurrency gains, was approved by the ruling Liberal Democratic Party on Thursday.
Currently, even if a company didn’t sell the tokens and ran the risk of seeing their value drop once more, it would still owe $30 on the $100 gain if it held tokens it had purchased for $100 that increased to $200 during the tax year.
The country has made it very difficult for corporate investors to hold tokens in the hopes that the projects will succeed by enforcing the capital gains tax on those paper-only profits, which in turn has made it very difficult to raise money by issuing cryptocurrencies.
“Japan is an impossible place to do business,” Sota Watanabe, CEO of DApp and smart contract firm Astar Network and Stake Technologies, told the Japan Times this summer. He moved his firm to Singapore, in large part because of the tax issues. “The global battle for a Web 3.0 hegemony is underway, and yet, Japan isn’t even at the start line,” he said.
Generally speaking, the government of Prime Minister Fumio Kishida is attempting to court the cryptocurrency sector by reducing red tape and investing in the NFT and metaverse sectors.
In addition, a self-regulatory body for cryptocurrency exchanges called the Japan Virtual and Crypto Assets Exchange Association (JVCEA) declared plans in October to shorten the time-consuming screening procedure for listing tokens.
The action is taken in spite of the industry turmoil brought on by the demise of the FTX exchange, which is prompting elected officials and financial regulatory bodies worldwide to increase their support for cryptocurrency financial firms.