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The Japan Cryptocurrency Association (JCBA) and the Cryptocurrency Trading Association (JVCEA) have called on the authorities to implement a reform aimed at reducing income tax for frequent crypto investors.
The request to change the tax system in fiscal year 2023 addresses key issues that human rights groups say hinder the adoption of cryptocurrencies. The proposal addresses the need to improve the system for filing individual tax returns, the importance of crypto assets in the Japanese Web3 development strategy, and comparison with foreign taxation systems for crypto assets. The request provides for a separate tax of 20% for individual crypto investors with loss carry forward provisions for three years starting from the next fiscal year.
Association members are calling for a similar tax structure to be used in the cryptocurrency derivatives market. A separate tax of 20% on income with an exemption from unrealized gains will be a big relief for crypto investors in Japan, whose crypto investments are currently taxed at up to 55%.
The proposal to change the tax system comes just a week after information emerged about an internal tax reform memorandum due to be submitted to the Japan Financial Services Agency (FSA). Japanese market associations are lobbying groups that insist that a high tax rate will make it difficult to own digital assets in Japan. Especially compared to more crypto-industry-friendly states.
Mai Fujimoto, founder of blockchain consulting company Gracone, said crypto companies in Japan are leaving the country, facing high corporate taxes.
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