cryptopotato.com
Japan’s National Tax Agency published a partial revision of its corporate tax guidelines on June 20. They include a new set of rules for digital token issuers scrapping the previous taxes on unrealized gains from crypto assets issued by companies.
The new tax rules would “make it easier for cryptocurrency-related companies to do business in Japan,” said industry analyst Colin Wu.
Japan Eases Corporate Crypto Taxes
The latest tax exemption follows the approval of a proposal to eliminate the requirement for crypto firms to pay taxes on unrealized “paper gains” on tokens they issued and held.
Japanese fintech firms issuing tokens will be exempt from paying a fixed 30% corporate tax rate on their holdings.
Currently, laws imposed taxes on unrealized gains, which saw some companies move overseas to friendlier jurisdictions.
While there are still issues to be addressed to make it easier for crypto companies to do business in Japan, “this represents a step forward in improving the business environment,” reported local media.
There are two primary conditions for crypto token tax exemptions. The tokens must be issued by the company and held continuously from the time of issuance, and transfer restrictions must be in place.
The crypto community has reacted positively to the latest government move. Sota Watanabe, founder of Astar Network (ASTR), who has advocated for this tax revision, commented (translation):
“For the time being, people who want to do something like Astar can now do it without leaving the country. I would like to continue constructive discussions with politicians and authorities.”
He added that he wants to revise the taxation of holding tokens issued by other companies “as it is a hindrance to the domestic expansion of projects.”
Japan has been enforcing stricter AML (anti-money laundering) rules since the beginning of June in an effort to align with Financial Action Task Force (FATF) requirements.
Pivot to Asia Continues
Japan was one of the first countries to fully legalize and regulate cryptocurrencies so remains a popular destination for businesses. Earlier this month, reports emerged that its largest bank could become a stablecoin issuer.
However, Hong Kong and Singapore have emerged as friendlier nations for crypto this year with their own regulations and digital welcome mats.
Meanwhile, America continues to crack down on the industry taking legal action against companies for failing to do the impossible – register as securities exchanges.