**Japan’s Ruling Party Still Pushing for Crypto Tax Reform Despite PM’s Caution**
Japan’s ruling party, the Liberal Democratic Party (LDP), is continuing to push for crypto tax reform despite recent cautious statements from Prime Minister Shigeru Ishiba.
According to the Japanese media outlet *CoinPost*, the party’s Headquarters for the Promotion of a Digital Society is set to outline its plans for reforming the taxation of cryptocurrencies in Japan before the end of the year.
**Crypto Tax Reform Proposals Must Roll Out Before End of 2024, Says Minister**
The LDP’s Headquarters for the Promotion of a Digital Society team met with the Financial Research Council on December 18. The two parties held a “discussion” on “urgent proposals” aimed at transforming crypto into “assets that contribute to the Japanese economy.”
The party has been working on Web3 policy and tax reform-related issues since the premiership of Fumio Kishida. According to *CoinPost*, the LDP’s digital policymakers will “prioritize” creating a “tax reform outline” in the final days of 2024. *CoinPost* wrote:
“This outline will set out a basic policy for tax reform in the following year.”
**Countdown to Trump Presidency**
However, the outlet cautioned that if the policymakers fail to present a proposal for crypto tax reform, it would be “extremely difficult to realize any changes in 2025.” In Japan, policy leaders usually submit tax reform proposals at the end of the calendar year and then present them to parliament the following year.
Japanese Minister of Digital Affairs Takuya Hirai emphasized the importance of the timing of the discussion, given that the Donald Trump administration will take office in Washington in January 2025.
“I believe that this proposal is important for the government. We must take a comprehensive, clear stance on taxes, regulations, and cybersecurity before the Trump administration takes office,” stated Minister of Digital Affairs Takuya Hirai.
Experts believe Tokyo wants to cement any new changes in Japan’s cryptocurrency policy before Trump’s inauguration. These changes could involve tax reform, as well as new regulations and cybersecurity laws.
The Headquarters for the Promotion of a Digital Society formulates policy recommendations for the government’s consideration. However, Ishiba’s office is not obligated to accept or implement these recommendations. In recent weeks, the Prime Minister has refrained from committing to crypto tax reform or the launch of Bitcoin spot ETFs in Japan.
Ishiba has appointed lawmakers known for their support of crypto reform to ministerial positions. He also mentioned blockchain technology in his election manifesto.
However, voices outside the LDP have also called for “urgent” reform. Opposition leaders have repeatedly warned that capital is flowing out of the country due to an “unfair” taxation system for crypto investors.
While many other countries impose a flat capital gains tax of around 20% on traders, Japan’s tax rules require crypto traders to declare their crypto profits on their annual income tax returns. They must report crypto trading profits under “other income,” which means the nation’s highest earners could end up paying up to 55% on their crypto trading revenues.
The Headquarters for the Promotion of a Digital Society stressed that its proposal is of “urgent” importance. On X, Hirai wrote that the LDP had been working on crypto legislation “faster” than any party “in the world.”