The Japan Blockchain Association (JBA), a group of companies and organizations involved in the cryptocurrency industry, has submitted a request to the government to revise the taxation system for cryptoassets, which they claim is hindering the growth of the Web3 industry in Japan.
The request that JBA submitted on July 28 includes three main points:
- Elimination of year-end unrealized earnings taxation on cryptocurrencies issued by third parties.
- Converting the method of taxation of personal transactions to a flat tax rate of 20%.
- Removal of income tax on profits whenever crypto assets change hands.
JBA argues that these changes will create a more conducive environment for citizens and businesses to participate in the Web3 economy, which is expected to grow rapidly in the near future. JBA also claims that these changes will increase tax revenues and increase Japan's reputation as a developed Web3 country.
According to JBA, the current tax system places a heavy burden on crypto-asset holders and traders, particularly those holding third-party-issued tokens such as DeFi (decentralized finance) and NFT (non-fungible token) platforms.
These tokens are subject to year-end unrealized earnings tax, meaning that holders must pay taxes on the increase in value even if they do not sell their tokens.
JBA says this deters domestic companies from entering the Web3 industry because they have to sell their tokens to pay taxes, which could lower the price of the tokens and hinder the development of the token-based economy.
JBA also stated that the current tax system is unfair and complex for individual crypto-asset traders, who have to pay income tax at different rates depending on their income level and type of transaction.
*Not investment advice.