Japan's Financial Services Agency is considering an act to amend the digital currency taxation system for corporate entities ahead of the tax reform in 2023.
Therefore, the proposed changes are the elimination of capital gains liability for undisposed corporate crypto assets as well as changing the classification of digital assets so that the maximum capital gains tax imposed is reduced to 20% from 50%.
Incidentally, under Japanese taxation laws, unconverted capital gains on digital currencies are recognized as income at the end of each fiscal year, and this triggers income tax liability.
In addition, individual and corporate crypto income exceeding 200,000 JPY ($1,463) in any fiscal year classified as miscellaneous income will be taxed at a rate ranging from 15% to 55% including the local resident tax rate.
While profits obtained from stock trading and foreign currency exchange (forex) are also taxed at 20%.
Under such circumstances, Japanese foreign permanent residents are also subject to a nominal rate of 55% and above including all crypto income generating activities such as decentralized financial lending, Bitcoin mining or regular cryptocurrency trading.
Justifying it, industry experts say the high tax liability faced by Japanese crypto startups is the main driver for shifting its corporate domicile overseas.
