The two most reputed entities advocating cryptocurrencies in Japan have recently submitted a request for tax reforms for cryptocurrencies.
The entities Crypto-Asset Exchange Association (JVCEA) and the Crypto-Asset Business Association (JCBA) have reportedly submitted the tax reform request.
Tax Reform in Favor of Crypto Tax Reduction
The tax reform request submitted by the JVCEA and the JCBA has requested to lower the taxes on cryptocurrency earnings. The reform is for individual cryptocurrency investors in Japan.
The proposal has been added to the fiscal 2023 tax reform where the real reason for the lack of cryptocurrency adoption in Japan has been highlighted.
Both the groups claim that it is due to the high taxes on crypto earnings that crypto adoption in the country is being hindered. Many people do not adopt cryptocurrencies just because they have too many risks to consider.
High Tax Rates Worry Many Japanese Investors
Cryptocurrency investors do not want to go through so much hassle to invest in cryptocurrencies. Once invested, they have to actively monitor the crypto markets to earn profits only to have quite a large percentage deducted in the form of taxes.
Points Highlighted in the Proposal
The proposal requests that necessary amendments and reductions must be made to the tax rates. The tax filing environment for cryptocurrencies must be made friendly for individuals.
The proposal also requested the authorities to review the cryptocurrency tax laws and requirements in other countries. It also stressed the adoption of the Web3 strategy in Japan for taking advantage of cryptocurrency assets.
Separate 20% Tax for Individuals
The proposal suggests that a separate 20% tax should be implemented on cryptocurrency investors. This means that the tax is to be reduced significantly for individual cryptocurrency investors.
The proposal also requests that the same 20% tax rule should be applied to the derivatives market for cryptocurrencies.
If the tax on cryptocurrencies is reduced to 20%, it will be a great help for the entire cryptocurrency sector in Japan. Especially, it will be a game changer for the entire cryptocurrency community of individual investors.
For now, each individual cryptocurrency investor has to face huge taxes based on the profits they generate from cryptocurrencies.
According to an estimation, individual cryptocurrency investors in Japan may have to pay up to 55% taxes on cryptocurrency investments.
Cryptocurrency Tax Rates for other Countries
Other countries such as Thailand, South Korea, and India that are pro in cryptocurrencies also have cryptocurrency tax structures in place.
However, the tax rates in these respective countries are comparatively lower than in Japan. The cryptocurrency tax rates in Thailand, South Korea, and India are 15%, 30%, and 20% respectively.
For now, South Korea has postponed the implementation of cryptocurrency tax until 2025.
