Just In: Japan Mulls Tax Relaxation For Cryptos

Japan’s Prime Minister Fumio Kishida has come up with a new initiative to boost the country’s economy amidst the global economic slowdown. In the latest development, Japan’s financial watchdog proposed a relaxation of corporate tax rules for crypto assets.

This will lighter levies for individual stock investors to revive the country’s economy. This is seen to be supporting the government’s aim to reinvigorate the economy of the country. 

In its annual tax-code change request announced Wednesday (August 31) the regulator proposed that companies should be immune from paying taxes for paper gains made on crypto coins that they hold after issuing them. The Financial Services Agency (FSA) also called for encouraging a programme that gives tax breaks to individual investors.

FSA proposal supports vision of “New Capitalism”

The move is in line with Japan’s PM’s vision of “New Capitalism”, which seeks to support the world’s third-largest economy. Fumio Kishida had promised to double the household’s wealth while providing support to help the Web3 businesses in the country to grow. 

Crypto lobbyists say high corporate taxes provide an unfavourable business environment to new project launches in Japan

High corp taxes major problem

The decision came as Crypto lobbyists have been demanding changes, saying that high corporate taxes have impeded the launch of new projects in Japan. This, according to them, has caused some companies to relocate to other jurisdictions like Singapore and elsewhere. 

At present, profit from cryptocurrency holdings, together with unrealised gains, attract corporate tax of almost 30%. The FSA proposal wants the government to expand a tax break initiative called the Nippon Individual Savings Account (NISA) for retail investors by increasing its investment caps and making the scheme permanent. Under NISA, people can have some of their investment gains and dividends free from capital-gains tax over a period of time.

According to the data from the Bank of Japan, Japanese households hold nearly 50% of their US$14.5 trillion financial assets in the form of cash and deposits.

The move marks the latest in years of efforts to push individuals to place their savings to productive use, like investing in stocks for the benefit of the overall economy of Japan.