Japan's crypto groups are lobbying their government agency to lessen the high taxes imposed on cryptocurrencies.
Companies and individuals in Japan are submitting a proposal to the Financial Services Agency (FSA) this week, asking to ease up its strict and hefty taxation laws for cryptocurrency.
The proposals' principal goal is to get the FSA to stop taxing unrealized profits on cryptocurrency holdings if a company owns them for reasons other than short-term trading.
Japanese Crypto Groups
Crypto assets are under strict rules and regulations in Japan. Due to the country's regulatory climate, buying and selling digital assets in Japan can be challenging for both enterprises and individual investors.
The crypto lobbying groups in Japan intend to approach the country's financial regulatory authority with a proposal to alleviate the country's high crypto tax rates.
Additionally, they want to make a request to the government to stop the taxation of paper profits on cryptocurrency holdings that are owned by companies for reasons other than short-term trading.
Experts are warning that these increased security measures would make Japan less competitive as a hub for crypto activities.
Included in the proposal is to suggest to the FSA a reduction in income tax rates on crypto gains for individual investors to 20%, which is significantly lower than the present rates, which tax some investors up to 55%.
Profits from cryptocurrency holdings are currently subject to a corporate tax of approximately 30%. This tax also applies to gains that have not yet been realized.
Having an insurmountable amount of taxes charged to investors and individuals can be a drawback to businesses who want to hold digital assets or to projects that plan to launch cryptocurrency-related ventures.
Danny Talwar, Head of Tax (APAC region) at the cryptocurrency tax platform Koinly, told Cointelegraph that, unlike in countries that are more crypto-friendly, it is hard for businesses and individual investors to own digital assets in Japan because of the way the law is set up.
Talwar said, "The high crypto tax rates make Japan less competitive on the international front compared to countries like Singapore and Dubai, which are increasingly becoming digital asset hubs for business."
Talwar says that the taxation of unrealized capital gains can lead to situations in which taxes paid are not proportional to the value of the asset when it is sold. This is especially common for volatile asset classes.
Although the details of the scope of the proposal have not yet been made public, he added that the FSA's acceptance of the suggestions would be a positive step toward crypto-friendly regulation in Japan.
Cryptocurrency Regulation in Japan
Cryptocurrency restrictions in Japan have long been urged by many to hopefully ease up and make transactions feasible, possible, and fair.
In addition, Japanese politician Masaaki Taira said that regulators ought to ease up on crypto laws in order to stop the brain drain of talented digital workers.
According to BNN Bloomberg, the Japan Virtual & Crypto Assets Exchange Association (JVCAEA) and the Japan Cryptoasset Business Association (JCBA), which include cryptocurrency companies such as the Bitcoin Association and forex broker WikiFX, are key contributors to the crypto proposal.
As part of an initiative that was launched a month ago, the calls from the cryptocurrency industry will serve as a test to determine the level of dedication that the administration led by Prime Minister Fumio Kishida has to expanding Japan's so-called Web3 business.
Some Japanese companies have already moved their operations abroad to nations such as Singapore as a result of the country's high taxes, which are especially onerous for a great number of cash-strapped startups.
