In an effort to boost growth in the domestic finance and IT sectors, the Japanese government plans to streamline tax regulations for local cryptocurrency companies.
Currently, these companies are required to pay a flat 30% corporate tax rate on their cryptocurrency holdings, regardless of whether they profit from a sale. This has reportedly led to some locally established blockchain-crypto businesses and talent relocating to other countries. By simplifying these tax regulations, the government hopes to encourage these businesses to stay and thrive in Japan.
Despite the recent collapse of FTX, Japan’s ruling Liberal Democratic Party (LDP) tax committee has shown a strong desire to support and advance the local cryptocurrency and Web3 industries. On December 15, the committee approved a proposal from August that would exempt cryptocurrency companies from paying taxes on paper gains from tokens they own and issue. This move indicates that the government is committed to fostering growth in these industries.
Japan’s Prime Minister, Fumio Kishida, has emphasized the importance of NFTs, blockchain, and the Metaverse in Japan’s digital innovation. As an example, he pointed to the digitization of national identity cards.
In October, the Japan Virtual and Crypto Assets Exchange Association (which Prime Minister Kishida had encouraged to become a self-regulatory body in June) also announced plans to streamline the process for launching new tokens on exchanges by eliminating the rigorous screening procedure.
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