Japan Might Try to Improve Crypto Taxation Policy
While Japan is considered somewhat crypto-friendly when compared to some of the other Asian countries, the system is far from perfect. Because of this, a Japanese lawmaker has recently proposed several changes to the crypto taxation framework, in an effort to make it easier for those involved with digital currencies to report their earnings.
With this in mind, the lawmaker, whose name is Takeshi Fujimaki believes that Japan should avoid crashing the future of cryptocurrencies and blockchain technology through their taxation framework. As such, the changes he is advocating for will reportedly encourage the further adoption, spread and implementation of digital currencies and blockchain technology in Japan.
- Reducing the tax percentage from 55% to 20%
According to the lawmaker, crypto profits aren’t as stable as a salary, therefore Japanese investors can receive large profits, yet they can also face huge losses after bad investment decisions. Since we’re talking about using financial instruments as a means of profit, Takeshi thinks that the taxation framework should be similar to that of mutual funds, stocks and other types of investments.
- Removing crypto-to-crypto trading taxes
At this moment in time, trading between two digital currencies is an activity that is subject to tax in case a profit is generated. This approach is unfair, granted that there aren’t numerous methods of directly spending cryptocurrencies, and most traders still need to exchange the funds back into the Japanese Yen. As such, Takeshi mentioned: “In order to increase the volume of transactions between virtual currencies and to revitalize the virtual currency market, trading between virtual currencies should be tax exempt.”
- Exempting tax from small crypto purchases
In case you wish to make a micro-transaction using crypto, you’d still need to pay tax, granted the conversion. However, keeping track of all small transactions can be quite tiresome; hence a more efficient system would need to be implemented. Exempting small transactions from tax will likely encourage crypto use, and most probably wouldn’t hurt the economy in the long run. According to the lawmaker, “If you do everything like this, you cannot hope for penetration of virtual currency settlement in real society. The small amount of virtual currency settlement should be tax exempt, and the virtual currency settlement in the real world should be expanded.”
All of these proposals seem straight-forward and logical, granted the current status of the digital currency market. After all, in October, the Japanese Tax Commission stated that they are interested in simplifying the current system. Do keep in mind that the proposal has not yet been adopted by the Japanese government.