Japan Scraps Taxes on Corporate Unrealized Crypto Gains

The Japanese Cabinet recently approved a significant fiscal policy change, eliminating taxes on unrealized gains from cryptocurrency holdings for businesses. This policy adjustment is part of Japan's 2024 fiscal tax reform, aimed at alleviating the tax burden on unrealized gains from holding cryptocurrencies for companies, with the potential to greatly stimulate the growth of Japan's Web3 industry.

The objective of this tax policy change is to exempt businesses from taxes on unrealized gains from long-term cryptocurrency holdings. This new tax regime is a strategic move by Japan to boost liquidity in the cryptocurrency market, aligning with strategies adopted by other Asian cryptocurrency hubs. According to the proposal, Japanese companies will be exempted from relevant taxes when holding cryptocurrencies for an extended period.

In an effort to help businesses alleviate the tax burden associated with unrealized gains from holding cryptocurrencies, the Japanese government is actively pushing for this tax reform, having obtained Cabinet approval. Reportedly, this reform plan will allow companies to be exempt from taxes on unrealized gains when holding cryptocurrencies for the long term starting from April next year. This revision is part of the national tax system for digital assets, announced earlier by the Japanese government after a Cabinet meeting. Additionally, the government has approved a tax reform that will benefit companies holding cryptocurrencies. Amendments to the tax law for the fiscal year 2024 will exempt companies from paying taxes on unrealized gains from third-party digital tokens such as Bitcoin, with this revision already receiving Cabinet approval.

According to reports, this revision means that companies will no longer be required to pay taxes on their unrealized gains when holding cryptocurrencies for an extended period. Meanwhile, the Japanese government is in discussions about plans to exempt companies from paying taxes on unrealized gains from cryptocurrency, a proposal that will be incorporated into the 2024 fiscal tax reform plan currently under discussion by the ruling coalition.

This policy change is a significant boon for the development of Japan's Web3 industry. The direct involvement of politicians in driving policy development is a new approach in Japan, where traditionally this role has been taken on by the bureaucratic system. It has been reported that Prime Minister Fumio Kishida's government has been considering recommendations from industry associations such as the Japan Cryptocurrency Business Association (JCBA) and the Japan Blockchain Association, exploring how best to promote the industry and viewing it as a cornerstone of economic reform. This policy change is expected to ease the situation for Web3 companies, which previously faced the need to pay taxes before realizing profits, potentially reducing the incentive for them to relocate overseas.