Japan’s Financial Services Agency aims to reduce crypto taxes by 2025, aligning them with traditional investments. Discover the latest updates on the proposed tax reforms.
Japan’s Financial Services Agency (FSA) has revealed plans to amend the nation’s tax laws, potentially lowering the tax burden on crypto assets by 2025. This initiative is part of a broader tax code reform, aiming to bring the treatment of cryptocurrencies in line with traditional financial assets.
In its August 30 tax reform request, the FSA emphasized that cryptocurrency transactions should be considered in the same way as other financial assets that the public invests in. The regulator stated, “It is essential to evaluate whether cryptocurrency should be treated as an investment asset for the public.”
Currently, according to crypto accounting firm TokenTax, profits from cryptocurrency in Japan are taxed as miscellaneous income, with rates ranging from 15% to 55%, depending on the individual’s income bracket. The highest rate applies to earnings exceeding 200,000 Japanese yen (approximately $1,377), making it significantly higher than the 20% tax rate applied to profits from stock trading.
Corporations holding crypto assets face a flat 30% tax rate on their holdings at the end of the financial year, regardless of whether they made any profit from the sale of assets. Tax reform proposals are submitted by government ministries to the ruling party, which forwards them to the tax system research committee for review before the national legislature considers them.
Calls for Tax Reform on Crypto Assets
For years, advocates in Japan’s cryptocurrency sector have been urging a revision of the tax structure on digital assets. The Japan Blockchain Association, a prominent pro-crypto lobbying group, has been at the forefront of these efforts. In 2023, the group formally requested a reduction in the tax rate on cryptocurrencies.
In addition, the association submitted another request for the 2025 fiscal year on July 19, pushing for a flat 20% tax rate and a three-year carryover deduction for crypto losses. However, despite these lobbying efforts, no significant changes have been enacted so far.
