Japan’s Ruling Party Urges ‘Immediate’ Crypto Tax Reform

crypto tax Japan
Ad Disclosure
Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. However, this potential compensation never influences our analysis, opinions, or reviews. Our editorial content is created independently of our marketing partnerships, and our ratings are based solely on our established evaluation criteria. Read More
Last updated:
Ad Disclosure
Ad Disclosure

We believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. However, this potential compensation never influences our analysis, opinions, or reviews. Our editorial content is created independently of our marketing partnerships, and our ratings are based solely on our established evaluation criteria. Read More
Author
Tim Alper
Author Categories
About Author

Tim Alper is a British journalist and features writer who has worked at Cryptonews.com since 2018. He has written for media outlets such as the BBC, the Guardian, and Chosun Ilbo. He has also worked...

Last updated:
Why Trust Cryptonews
Cryptonews has covered the cryptocurrency industry topics since 2017, aiming to provide informative insights to our readers. Our journalists and analysts have extensive experience in market analysis and blockchain technologies. We strive to maintain high editorial standards, focusing on factual accuracy and balanced reporting across all areas - from cryptocurrencies and blockchain projects to industry events, products, and technological developments. Our ongoing presence in the industry reflects our commitment to delivering relevant information in the evolving world of digital assets. Read more about Cryptonews
Ad DisclosureWe believe in full transparency with our readers. Some of our content includes affiliate links, and we may earn a commission through these partnerships. Read more

Japan’s ruling party, the Liberal Democratic Party, wants the government to carry out “immediate” crypto tax reforms.

Per an official Liberal Democratic Party release and a report from the Japanese-language media outlet CoinPost, the party’s web3 project team unveiled a “White Paper” on April 12.

In February, the government unveiled plans to allow venture capital firms to invest in domestic crypto companies.

Japan’s Ruling Party Wants Crypto Policy Changes

The team said that “profits and losses” from “cryptoasset transactions” should “be subject to separate taxation by self-assessment.”

And the team said the above issue “should be addressed immediately.” The report has been passed on to the party’s Digital Society Promotion unit.

Currently, Japanese law stipulates that crypto traders must include crypto trading profits and losses on annual income declarations.

What Are the Rules Surrounding Crypto Tax in Japan?

Japanese taxpayers need to declare all crypto-related earnings as “other income.” This means that while low-earning individuals can pay as little as 11% on their crypto trading profits, those in higher tax bands could pay over 50%.

In most other countries that tax crypto trading profits, traders need to pay capital gains tax on earnings – as they might do with assets such as stocks and shares.

Campaigners have been urging Tokyo to change its stance for years. However, Prime Minister Fumio Kishida has taken a decidedly pro-web3 stance in recent times.

Kishida has talked up the sector, indicated a willingness to reform tax laws, and spoken in favor of NFT-powered economic growth.

And this has already led to tax reform for corporations, who will no longer have to pay tax on “unrealized” gains.

This refers to coins that appreciate in value over the course of a financial year, but are not sold for fiat in the same period.

What Happens Next?

If the Digital Society Promotion unit approves the tax reform for individual traders, it will be passed on to the Political Affairs Research Council.

If this council approves, tax reform will become official Liberal Democratic Party policy. From here, lawmakers will be able to create a bill to present to the National Diet.

All of these steps may well be time-consuming, but none should provide serious obstacles to the web3 project team’s proposed changes.

The composition of Japan’s House of Representatives. Darker green dots represent LDP seats.
The composition of Japan’s House of Representatives. Darker green dots represent LDP seats. (Source: BibiBegin)

Japan’s ruling party has been in power since 1955. It holds 259 seats out of a maximum of 465 in the House of Representatives and 116 of 248 seats in the upper house, the House of Councillors.

As such, it now appears to be a case of “when,” not “if” for Japanese crypto traders hoping for tax reform.

Web3 Revolution on Cards in Japan?

The white paper’s authors claim they want to place Japan “at the center of the web3 revolution.”

The authors also said they “strongly support the development of blockchain technology” in “social infrastructure” projects.

As well as separating crypto profits taxation from income tax, the proposed changes would also allow traders to defer losses for up to three years.

The authors further suggested discussing Japan’s tight crypto leverage trading rules, an issue that has dogged Japanese exchanges for several years.

The headquarters of Japan’s ruling party, the Liberal Democratic Party.
The headquarters of Japan’s ruling party, the Liberal Democratic Party. (Source: Junpei Abe [CC BY 2.0])

Japanese crypto industry insiders appeared happy with the news, with some opining that the white paper addresses “many” of their requests.

The Astar Network and CEO at Startale Labs Sota Watanabe said that the paper “comprehensively covers” the “main issues” that the industry felt “needs improvement.”

Genki Oda, the Founder of BITPoint and the Vice Chairman of the self-regulating Japan Crypto Asset Exchange Association concurred. Oda said:

“Almost all of the [industry’s] requests have been included [in the white paper]. It is important to carry out [these reforms] in the future. We will take steps to ensure it becomes a reality.”

More Articles

Price Analysis
Price Breakthrough Forecast: The Next XRP Rally Could Be Here Soon
Arslan Butt
Arslan Butt
2025-02-09 14:21:48
Altcoin News
Gold-Backed Altcoins Boom as Major Banks Raise Price Predictions: Which Coins to Get
Arslan Butt
Arslan Butt
2025-02-09 12:55:24
Crypto News in numbers
editors
Authors List + 66 More
2M+
Active Monthly Users Around the World
250+
Guides and Reviews Articles
8
Years on the Market
70
International Team Authors