Japan's National Tax Agency published a partial revision of its corporate tax guidelines, implementing new tax rules for token issuers.
Token issuers in Japan no longer have to pay corporate taxes on unrealized cryptocurrency gains, according to a law revision by the National Tax Agency on June 20.
The tax exemption goes into effect nearly six months after the Japanese government approved a proposal eliminating the requirement for crypto firms to pay taxes on paper gains on tokens they issued and held.
Legislators in Japan have been discussing new crypto tax rules since last August as part of a broader tax reform for 2023, but the tax authority has only given the final approval this week. Under the new rules, Japanese firms issuing tokens are exempt from paying a set 30% corporate tax rate on their holdings. Before this law, even unrealized gains were subject to taxation.
The ruling Liberal Democratic Party (LDP) expects to make it "easier for various companies to do business that involves issuing tokens.”
The cryptocurrency industry in Japan has been undergoing significant changes lately. Since June 1, the country has been enforcing stricter Anti-Money Laundering (AML) measures to trace cryptocurrency transactions to align Japan's legal framework with global crypto rules. Lawmakers revised the AML legislation in December after it was found to be insufficient by the Financial Action Task Force (FATF).
In June last year, the government passed a legislation prohibiting the issuance of stablecoins by non-banking institutions. The bill — implemented just a few weeks ago — stipulates that stablecoin issuance in the country is limited to licensed banks, registered money transfer agents and trust companies.
Japan was one of the first countries to legalize crypto as a form of private asset, and its crypto regulations are among the strictest in the world. After Mt.Gox and Coincheck were hacked, Japan's financial regulator tightened rules on crypto exchanges. Local regulations are believed to have facilitated the speedy return of assets to FTX users in Japan following the exchange's global collapse, in contrast to users in other countries without a clear deadline for their refunds.