coinedition.com
Japan’s National Tax Agency has recently issued a notice outlining revisions to the corporate tax rules for cryptocurrencies. This move signifies a positive step towards enhancing the business environment and addressing concerns related to conducting cryptocurrency-related operations in Japan. As per the newly approved regulations, Japanese companies that issue tokens will be exempted from paying the standard 30% corporate tax rate on their holdings.
The revised regulations specifically state that if certain conditions are met, crypto assets (virtual currencies) issued by companies will be excluded from paying corporate taxes on unrealized cryptocurrency gains.
The exclusion of self-issued virtual currencies from market valuation has been a topic under consideration for some time now, and it is also included in the “ruling party tax reform outline” for fiscal year 2023. The official exemption, confirmed through the National Tax Agency’s notification, signifies a significant development in this regard.
Under existing laws, companies holding cryptocurrencies are subject to taxation on unrealized gains at the end of each period. This rule has long been criticized for burdening companies and impeding innovation in the cryptocurrency and blockchain sectors.
As a consequence of this legal provision, several companies have opted to conduct their business operations outside of Japan. However, with the latest revision, the regulations surrounding self-issued virtual currencies have been officially relaxed.
To be eligible for exemption from market valuation, two main conditions must be met. First, the cryptocurrency must be issued by the company and continuously held from the time of issuance. Second, the virtual currency must be subject to transfer restrictions due to specific circumstances from the time of its issuance.
These circumstances include implementing technical measures to prevent transfers to other individuals or being held as trust property in a trust that satisfies certain requirements.
The news of the National Tax Agency’s notice has been met with joy and enthusiasm within the Japanese community and among individuals involved in cryptocurrency-related businesses. Sota Watanabe, the founder of Aster Network (ASTR), who has been actively advocating for the revision of this rule, expressed his satisfaction with the latest developments.