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Japan Considers Axing Crypto Corporate Tax

Japan's current corporate tax based on mark-to-market valuations is driving Web3 firms to seek solace in Singapore, Dubai and Switzerland.

Photo by jun rong loo / Unsplash

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Companies in Japan may no longer need to pay taxes on unrealized gains from cryptocurrencies, if a new proposal by the country's ruling coalition passes into law.

Digital assets held for purposes other than short-term trading would be exempt from corporate tax based on mark-to-market valuations at the end of each fiscal year.

Policymakers from the Liberal Democratic Party and ruling coalition partner Komeito are discussing the proposal, which aims to be included in the fiscal 2024 tax reform plan.

Companies are currently taxed based on mark-to-market valuations of their cryptocurrency holdings. Venture capital firms and NFT businesses that hold crypto for payment reasons fall under this ruling.

Consequently, these companies are exploring tax-friendlier jurisdictions including Singapore, Dubai and Switzerland.

The move comes as Japan warms to Web3. Stablecoin issuer Circle and Japanese financial industry powerhouse SBI Holdings recently announced a strategic partnership. The collaboration brings wider adoption of the US Dollar Coin (USDC), which simplifies cross-border transactions.

Circle, SBI Holdings Partner to Boost USDC Banking, Web3 Services in Japan
MOU signed between Circle and SBI Holdings set to transform Japan’s financial landscape and boost circulation of USDC

 SBI Group will also adopt Circle’s Web3 Services solutions such as Programmable Wallet, blockchain infrastructure and smart contract management tools.

A few days ago, Binance Japan launched its full operations in compliance with the government's regulations, just weeks after CEO Changpeng Zhao stepped down.