A proposal to stop taxing unrealized cryptocurrency gains was approved by the Japanese cabinet by the ruling Liberal Democratic party. This will probably help the nation’s Web3 industry grow.
The plan would eliminate corporate taxation on the difference between the market and book values of cryptocurrency assets issued by other businesses. It must be discussed in the Diet, the Japanese parliament. The Dec. 22 approval, if it were to become law, would eliminate a disparity in the treatment of assets issued by holders, who are not subject to mark-to-market taxes, and assets issued by third parties. The country’s Web3 businesses have been hampered by the tax.
Viewing the industry’s growth as a cornerstone of economic reform, Prime Minister Fumio Kishida’s administration has been reviewing submissions from associations within the sector, including the Japan Blockchain Association and the Japan Crypto Asset Business Association (JCBA). It is unusual for politicians to spearhead policy development in a nation where bureaucracy typically fills that capacity.
Chairman of the JCBA’s tax review committee Gaku Saito stated in an interview that Web3 companies have been relocating abroad because they were subject to taxes even before they turned a profit from their operations. Businesses were being forced to sell their assets due to unrealized gain taxes, which was impeding their ability to grow.