The Japanese cryptocurrency industry is stepping up its lobbying efforts against stringent taxes preventing the growth of digital assets in the country. Leading this campaign is the Japan Blockchain Association (JBA) headed by Yuzo Kano, the CEO of bitFlyer Holdings which is one of the largest players in the market. In a statement released by the JBA on June 17, Kano reaffirmed their commitment to the push for change in tax laws within the next year.
As for the current taxation laws in Japan, the profits generated from the trading of cryptocurrencies are categorized under ‘other income’, which means that the higher income earners have to pay a tax of 55% on their profits. This is quite alarming, especially when compared with the global average capital gains tax rate of approximately 20%, as estimated by PwC.
According to the JBA, which consists of the majority of well-known Japanese crypto exchanges and other companies that use Blockchain technology, these rates are too high and do not meet international standards.
In a session held on June 17, in which Kano was reelected as the JBA’s chair, the subject of how to apply pressure for major changes to the tax system was also addressed. Other attendees of the meeting were Tatsuto Fujii of Mizuho Financial Group, and CEOs of well-known crypto projects, including double jump.tokyo, and Startale Labs.
The JBA has made a very bold move to the government by proposing what can be considered one of the most revolutionary self-reporting tax systems for individuals dealing with cryptocurrencies. This proposal also suggests a fixed tax percentage of 20%.
Besides this, Kano also underlined the importance of abolishing income taxes on revenue arising from trading cryptocurrencies for other cryptocurrencies. This kind of action would align Japan with other countries where only the conversion of cryptocurrencies to fiat currency is taxable.
Further, JBA is lobbying for individual traders to be allowed to offset their losses when filing taxes. This would serve and bring more financial stability to the traders who, sometimes, have several unprofitable years. The association is also focusing on lobbying for the government to change its harsh leverage ratios limitation on the trading of cryptocurrencies.
The JBA was established in the year 2014 and 2024 will be 10 years since the formation of the organization. Kano says that the efforts of this association have resulted in a massive enhancement of corporate crypto tax policies. Most significantly, as was stated last year, it was decided to exclude taxes on unrealized gains from cryptocurrency for tokens owned as an asset in corporations based in Tokyo.
The JBA’s proposed amendments are aimed at enhancing the legal framework for the use of cryptocurrency in Japan as part of the ongoing efforts to harmonize it with global standards. This will not only be a great advantage for the industry but also a helping hand in its further development in the rapidly changing world.