The principal financial regulator of Japan, the Financial Services Agency (FSA), has decided to take crypto regulation into its own hands by proposing to change the tax code regarding digital assets.
According to local media reports, the FSA submitted the request on Aug. 31. The most notable suggestion in the 16-page document is a bid to free domestic firms from the end-of-the-year “unrealized gains” tax on crypto. In some national legislation, the legal entities have to pay taxes only after the crypto assets are sold to fiat, but in Japan, they are taxed on a regular yearly basis.
The amendment proposed by the FSA could be accepted, as the agency states that the Ministry of Economy, Trade and Industry has already supported it.
As the FSA explains in its release, the reform will “improve the environment for the promotion of Web3 and promote business startups that make use of blockchain technology.”
Related: EOS secures regulatory approval in Japan, will trade against yen
Advocates of the crypto industry in Japan have been demanding a revision of the national tax regime around digital assets for some time. At the end of July, the Japan Blockchain Association (JBA), a non-government group, asked the government of Japan to make three major changes to crypto regulation.
The first was to eliminate the year-end unrealized gains tax on corporations holding crypto assets. The other two include switching from personal crypto asset trading profits taxation to self-assessment separate taxation, with a uniform tax rate of 20%, and eliminating income tax on the profits generated each time an individual exchanges crypto assets.
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