Yomiuri, a local news outlet from Japan has recently reported an update from the Financial Services Agency (FCA) of Japan.
According to the news outlet, the update involves FCA and the corporate entities’ taxation system for virtual currencies.
FCA is amending the Taxation System
According to the news outlet, the Financial Services Agency is in the process of considering if they should amend the taxation system for the corporate entities surrounding virtual currencies or not.
The news has started rotating surrounding the amendment prior to the tax reforms in Japan for the year 2023. It has been pre-decided that the reforms in the tax law surrounding virtual currencies will be implemented in the year 2023.
Proposed Changes for the 2023 Tax Reforms
According to the tax reforms, the cryptocurrencies or virtual assets in possession of the corporate entities that are not undisposed will be removed from capital gain liabilities.
Liability on Held Digital Assets
Initially, it was in the law that corporate entities will be held liable for any kind of cryptocurrency assets. Even if they hold the cryptocurrency assets or have sold them to generate profits, they would be held liable for capital gains.
Following the reform, the cryptocurrency assets not disposed of by the corporate entities will not be part of the capital gain liabilities at the end of each taxation year.
Tax Applicable Up to 20%
In addition to the above, the new tax law would also change the category of cryptocurrency assets. After the change, the maximum capital gains tax the corporate entities will need to pay would be reduced to 20%.
At the time of writing, the tax on the maximum capital gains is 55%. With the implementation of the 2023 tax reforms, the tax rate will be reduced to 20%.
As per the tax law, the maximum tax applied to digital assets, virtual currencies, and cryptocurrencies profits can be 20%.
The tax will be in place against the proceeds from such activities if the minimum earnings are 200,000 JPY or more. This amount translates to $1,463.
As per the miscellaneous income policy, plain cryptocurrency trading, Bitcoin mining, and other decentralized finance lending services are all subjected to taxes.
Constant Delays in the Tax Reform Implementations
It is worth noting that Japan had decided to implement the tax reforms back in 2021. It was decided that the implementation will be carried out from the beginning of 2021.
However, the cryptocurrency firms and their investors demanded that the implementation must be delayed. They were of the view that it could be time to get adjusted to the new policies and reforms.
Therefore, the regulator authorities announced the reforms will be implemented from the beginning of 2022.
Once again, the cryptocurrency communities in Japan demanded another extension and Japan announced the reforms will be implemented starting in the year 2023.