- The Financial Services Agency is proposing a reduced tax rate of 20% on crypto profits, aligning with traditional financial asset tax rates
- Currently, profits from crypto are taxed between 15% and 55%, much higher than the proposed rate for other financial assets
- The proposed “Japan crypto tax” change aims to make the tax environment more favorable for both individual and corporate investors, pending legislative approval
Japan might be about to spill the beans with a shake-up on crypto profits!
The Financial Services Agency, better known as the FSA, is planning to propose a reduction in the crypto profit tax rate to a flat 20%, thereby putting it on par with other financial assets. With this development, investments in cryptocurrencies are likely to shoot up, making the tax landscape quite interesting.
The FSA Wants Crypto to Be Treated Like Traditional Financial Assets
The government of Japan is planning amendments to the current tax rules on crypto assets in a bid to cut the tax rate and bring them in line with other financial assets. Recently, the country’s regulator, the Financial Services Agency, proposed a reform that could slash the tax on crypto profits to a flat 20% of gains.
The proposal was presented on August 30 in a tax reform request as part of a larger review of the tax code for 2025.
The FSA insists that crypto assets should fall into the category of traditional financial assets so that they could be more investable by the public. As the FSA wrote in its report:
“Cryptocurrencies should be treated as financial assets and an investment opportunity for the public.”
Current Tax Rates and Proposed Changes
In Japan, crypto gains are presently taxed as miscellaneous income and are rated between 15% and 55%, depending on a person’s income bracket.
That puts a tax of as high as 55% on every dollar above $1,377 – 200,000 Japanese yen – a bracket in heavy use for many crypto investors. But it only levies a maximum 20% on profits acquired through the trading of stocks.
According to the FSA, that should apply to their crypto counterparts as well. They also impose a flat 30% tax on companies holding crypto assets, whatever the investment amount, irrespective of whether they sold their assets for a profit.
These proposed changes provide some relief for both individual and corporate investors, thereby allowing a more friendly tax environment concerning crypto assets.
In Japan, the process of changing tax laws involves multiple steps. First, requests for tax reform from ministries are submitted to the ruling political party.
The requests are then forwarded to the tax system research committee for consideration, after which the national legislature considers it. After such consideration, final approval by the House of Representatives and the House of Councillors is necessary before the reforms can take effect.
Conclusion
With any luck, this may soon become a law that transforms the crypto market in Japan into an El Dorado for private and corporate investors alike. The legislative process is yet to be seen, but so far, those for the sector keep their fingers crossed.
