From the Digifinex blog.
Japan’s National Tax Agency recently amended certain interpretations of the Corporate Tax Law. Cryptocurrency issuers in Japan will no longer need to pay a 30% corporate tax on unrealized cryptocurrency profits. Let’s take a deeper look at the recent changes.
Amendment of Cryptocurrency Tax Laws
Under the previous regulations in Japan, cryptocurrency issuers had to pay a 30% corporate tax on the tokens they held, even if they hadn’t profited from selling them.
This provision was long criticized for being a “burden to businesses and hindering innovation in the virtual currency and blockchain industry”, leading some businesses to operate overseas.
However, Japanese lawmakers have been discussing new cryptocurrency tax rules since August last year. In December, the Liberal Democratic Party approved a proposal that, starting from April 2023, can relax the taxation rules for virtual currency-related businesses, and this provision was finally implemented this week. This legal revision will be included in the 5th fiscal year of the Reiwa era “Governing Party Tax Reform Charter” as part of the broader tax reform of 2023.
It’s worth noting, according to CoinPost, the amendment only applies to tokens issued by the “issuer’s company”. Capital gains tax still applies to tokens issued by “other companies”.
（Image via Wikipedia）
Ban on Stablecoin Issuance by Non-Banking Institutions
In June last year, the Japanese government passed a bill prohibiting non-banking institutions from issuing stablecoins. This law came into effect on June 1 this year, stating that stablecoin issuers must have licenses, be registered agent banks, trust companies, etc.
In a recent announcement, Japan’s largest bank, MUFG, announced it is in talks with several overseas stablecoin issuers to use its stablecoin issuance platform “Progmat Coin” on public chains such as Ethereum, Polygon, Avalanche, and Cosmos to launch stablecoins pegged to yen and foreign currencies.
（Image via PR TIMES）
Stricter Anti-Money Laundering Measures
According to Kyodo News, Japanese lawmakers decided to implement stricter anti-money laundering (AML) measures from June 1, including the Travel Rule to track cryptocurrency transactions and combat money laundering and other criminal activities.
The Travel Rule requires financial institutions processing crypto asset transfers to send customer information to the next institution while handling cryptocurrency transactions. This information includes the names and addresses of the sender and receiver.
The mentioned crypto assets include stablecoins or cryptocurrencies pegged to the US dollar, commodities, etc. Those who disobey the AML measures will face criminal penalties.
Keywords: Japan, Cryptocurrency, Corporate Tax, National Tax Agency, Corporate Tax Law, Unrealized Profits, Liberal Democratic Party, CoinPost, Stablecoin, Non-Banking Institutions, MUFG, Progmat Coin, Ethereum, Polygon, Avalanche, Cosmos, Anti-Money Laundering, Travel Rule, Kyodo News
This article came directly from the Digifinex blog, found on https://blog.digifinex.com/2023/06/30/japans-new-crypto-policies-no-more-30-corporate-tax-for-cryptocurrency-companies/