Japanese Finance Minster: Tokyo Will Review Crypto Tax System ‘by June’
The Japanese Finance Minister, Katsunobu Kato, has pledged that Tokyo will conduct a review of the nation’s controversial and widely criticized crypto tax laws by the end of June this year. According to the official website of the House of Representatives and a report from the Japanese media outlet Iolite, Kato made this announcement during a plenary session of the House of Representatives on the 31st.
Kato’s statement came in response to a question from Akihisa Shiozaki, a lawmaker from the ruling Liberal Democratic Party (LDP) and the head of the party’s Web3 Digital Society Promotion office. Kato explained that the Financial Service Agency (FSA) will conduct the review based on the tax system proposals of the ruling party. He further added that the review will include recommendations for necessary legislative amendments.
Prime Minister Shigeru Ishiba also expressed his belief that cryptoassets will contribute to solving Japan’s social problems and improving productivity. He emphasized the importance of the healthy development of web3, including cryptoassets, and the government’s role in ensuring user protection and improving the domestic crypto market environment.
Kato additionally mentioned that the FSA will outline its proposed changes to the nation’s tax authorities to ensure that any necessary changes are implemented before the new rules are enforced. He also suggested that Tokyo is prepared to revise its legal definition of cryptoassets. Currently, Japanese law defines crypto as a type of payment instrument, but Kato acknowledged that in reality, coins like Bitcoin are primarily traded for investment purposes. He revealed that the FSA intends to consider a wide range of opinions before making an official recommendation on the appropriateness of crypto’s current legal status.
Since 2017, when the FSA started regulating the Japanese crypto market, the agency has had the final say in all related regulations. The LDP, which has been in power for decades, has formulated basic crypto policy, while the FSA has been responsible for formulating regulations and legal amendments. All of the FSA’s proposals and requests made to parliament on the matter have been promptly adopted.
Prime Minister Ishiba’s predecessor, Fumio Kishida, took a relatively progressive stance on crypto regulation. Ishiba, on the other hand, has been more cautious about tax reform. Nonetheless, he has also made conciliatory comments about crypto and blockchain. Shiozaki’s office has called for faster action, stating last year that their proposal to reform crypto tax is of urgent importance.
Under current Japanese tax laws, crypto traders are required to report their profits on their yearly income tax returns, unlike many other countries that impose flat capital gains taxes on traders. Japanese traders must include their crypto trading profits as “other income” on their annual tax returns, which means that the wealthiest crypto traders in Japan must pay up to 55% of their trading profits to the Treasury.
Many critics and Japanese crypto investors argue that the Japanese crypto market is over-regulated, which has hindered growth in the web3 and crypto sectors. The FSA is reportedly considering amending the Payment Services Act to include crypto as an asset class under the Financial Instruments and Exchange Act, indicating a common stance on reform between the FSA and the Japanese Finance Minister.
