The Japan Blockchain Association (JBA), represented by Yuzo Kano (co-founder of BitFlyer), submitted three key tax reform proposals to the Japanese government on July 27 for 2024 fiscal policy changes. These demands aim to simplify crypto taxation and foster Web3 industry growth.
1. Elimination of Year-End "Unrealized Gains Tax"
Japan’s National Tax Agency previously conditionally exempted corporate holdings of self-issued tokens from unrealized gains tax if:
- The asset was issued and continuously held by the same entity
- The asset had transfer restrictions or met specific trust-asset criteria
However, taxes still applied to third-party-issued crypto assets held by corporations. The JBA now advocates for:
- Complete removal of unrealized gains tax on externally issued crypto assets
- Rationale: Current rules deter Web3 adoption; abolishing this tax would improve Japan’s business environment for blockchain innovation.
📌 Related: Japan’s Partial Crypto Tax Exemption for Corporate Holdings
2. Crypto Capital Gains Tax Reform
The association proposes:
- Flat 20% tax rate for individual crypto trading profits (vs. current progressive rates up to 55%)
- Per-trade reporting: Tax calculated per transaction rather than annual aggregates
- Three-year loss carryforward: Allow offsetting losses against future taxable gains within 36 months
👉 Why Japan’s crypto tax overhaul could boost investor participation
3. Removal of Crypto-to-Crypto Transaction Taxes
Key arguments against taxing crypto conversions:
- Complexity: Calculating profits for every trade creates administrative burdens
- Web3 readiness: Frequent asset swaps will dominate future economies; taxes hinder utility
- Solution: Exempt all crypto-crypto trades from income taxation
FAQs
❓ How does Japan currently tax crypto gains?
Japan imposes progressive rates up to 55% on crypto profits versus flat 20% for stocks/bonds. The JBA seeks parity via a uniform 20% rate.
❓ What’s the "unrealized gains tax"?
Corporations must pay taxes on paper gains from crypto holdings annually, even without selling. The JBA wants this abolished for third-party assets.
❓ Why eliminate crypto-crypto trade taxes?
Each conversion between tokens triggers taxable events, complicating DeFi/Web3 usage. Removing this encourages seamless blockchain economies.
📌 Pro Tip: Investors should track trade histories meticulously under Japan’s proposed per-transaction reporting.
👉 Explore crypto tax tools for Japanese traders
Risk Disclosure: Cryptocurrency investments are highly volatile. Conduct independent research and only invest what you can afford to lose.