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Japan’s Financial Services Agency is proposing a major crypto tax cut for 2025 to encourage investment in digital assets, as part of a larger push to align cryptocurrency taxation with traditional finance.
Japan Plans Crypto Tax Cuts for 2025
Plans for a complete reform of the tax code for fiscal year 2025 have been announced by Japan's financial authority. One of the elements might be a reduction in the tax rate for crypto assets.
The Financial Services Agency (FSA) of Japan emphasized cryptocurrency assets in its request for tax reform, which was submitted on August 30, and said that the public should be able to invest in them just like other financial assets.
"Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public," the FSA stated. "It is necessary to consider this issue from the perspective of whether it should be treated as such."
Crypto Gains Face 55% Tax Rate
Crypto accounting firm TokenTax reports that, as things stand, crypto gains in Japan are subject to a 15%–55% miscellaneous income tax.
Depending on one's income tax category, the maximum rate might reach 55% and is applicable to incomes over 200,000 Japanese yen ($1,377).
On the other hand, the top tax rate on stock trading gains is merely 20%.
Crypto Businesses Face 30% Tax Even Without Profit
Even if a company doesn't make a profit from selling its cryptocurrency, its owners are still subject to a 30% tax rate after the fiscal year ends.
According to Cointelegraph, the process begins with proposals for tax reform from various government departments. These requests are then forwarded to the ruling party, who in turn send them to a committee that studies the tax system and the national assembly for consideration.
The reform cannot be made into law in Japan until it has the approval of both the House of Representatives and the House of Councilors.
Japan’s Crypto Advocates Push for Reform
Japanese crypto sector supporters have been demanding a change to the country's digital asset tax policy for a while now.
The Japan Blockchain Association has officially asked the government to reduce the tax rate on cryptocurrency assets in 2023. The group is pro-crypto.
To encourage additional development in the country's crypto sector, the group also requested tax reform on crypto assets for the 2025 fiscal year on July 19.
A cryptocurrency tax rate of 20% and a loss carryover deduction of up to three years were among its suggested changes.
No changes to Japanese industry policy have resulted from these requests, despite our best efforts.
