An association of Japanese crypto exchanges and blockchain companies has petitioned the government to make coin-related tax reforms.
In an official Japan Blockchain Association (JBA) release, the companies asked Tokyo to make the changes ahead of the Financial Year 2025.
The JBA explained that high tax rates on crypto profits are “hindering” Japanese citizens’ efforts to save valuable assets.
The body called on Tokyo to use the same tax rate as it applies to conventional financial assets such as stock exchange-listed stocks.
Reform Crypto Tax Now, Urges Crypto Body
The JBA comprises some of Japan’s top blockchain firms and crypto projects, including the exchange bitFlyer.
Last month, the body said it would press the government to reform the nation’s strict tax laws and “focus on the introduction of” new tax measures in the year ahead.
The body noted that existing tax rules for cryptoasset-related transactions are overly complicated.
It also claimed that Japan’s sliding scale system of taxation is a “reason why many investors avoid investing in cryptoassets.”
In many other countries, tax rules oblige crypto traders to pay flat-rate capital gains tax levies on annual profits.
But Japanese law forces traders to file token-derived profits in the “other income” section on their tax declarations.
And that means the highest-earning individuals can pay a maximum of 55% tax on their crypto-related earnings.
This is far more than is the case in other leading economy nations, the JBA explained.
Crypto Tax Has ‘Negative Impact’ on Startups
The JBA and other industry groups have already successfully pushed Tokyo to reform the crypto tax laws governing companies.
This means that Japanese companies will no longer have to pay taxes on their unrealized crypto holdings.
Some lawmakers have shown an interest in reforming tax rates for private citizens, too. Many are thought to prefer a model that would tax crypto profits using capital gains levies.
The JBA says Japan’s crypto tax laws have “a negative impact” on Japanese companies that issue cryptoassets, as well as web3 startups.
The body warned that failing to reform the tax system would make Japan less competitive than other countries in the web3 sector.
It claimed that there would be “no end” to the number of “examples” of talented individuals and startups that “leave the country” looking for more favorable regulation.
The JBA called on Tokyo to do the following:
- Introduce separate self-assessment tax systems for crypto. This would involve scrapping the inclusion of crypto in the “other income” sections of annual tax declarations.
- Introduce a flat rate of 20% tax on crypto profits.
- Allow traders to carry forward losses for three years, so they can be deducted from crypto-related income in future tax years.
- Abolish tax on crypto-to-crypto transactions.
- Create a system for tax-free or tax-deductible crypto donations.
- Consider further future reforms to crypto derivative transaction-related tax rules.
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Matter Is Now ‘Urgent,’ Says JBA
On X (Twitter), the JBA wrote that it had “submitted a request for tax reform regarding cryptocurrencies (FY2025) to the government,” and explained:
“We firmly request tax reform for crypto assets. This is an urgent issue. [Tax reform] will allow web3 to grow into a core industry that can lead the next generation in Japan – and the world.”
Also on X, Yuzo Kano, the JBA’s head and the CEO of bitFlyer, wrote:
“I believe web3 will make a significant contribution to the medium- to long-term growth of the Japanese economy. It will let Japan develop international competitiveness. […] We cannot afford to fall behind. Crypto tax reform is an urgent issue. Let’s […] make it happen!”
The post Japanese Crypto Firms Petition Government to Reform Crypto Tax appeared first on Cryptonews.
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