As part of the Japanese government's efforts to stimulate the growth of the domestic financial and technological sectors, tax requirements will be eased for local crypto firms.
The corporate tax rate for Japanese crypto companies is 30% regardless of whether profits are generated. Crypto/blockchain companies and talent have moved abroad in recent years.
A proposal approved by the Liberal Democratic Party of Japan's tax committee on Dec. 15 — initially tabled in August — removes the requirement for crypto companies to pay taxes on paper gains from tokens they hold and issue.
Japan's next financial year begins on April 1, and the softer crypto tax rules will be submitted to parliament in January.
LDP lawmaker Akihisa Shiozaki, a member of the LDP's Web3 policy office, told Bloomberg that. “this is a very big step forward,” adding that “It will become easier for various companies to do business that involves issuing tokens.”
The government appears determined to continue developing the crypto and Web3 industries despite the FTX disaster.
Fumio Kishida, the Japanese Prime Minister, stated in October that NFTs, blockchain technology, and the Metaverse will play a significant role in the nation's digital transformation. An example cited by the PM was the digitization of national identity cards.
A self-regulatory organization, the Japan Virtual and Crypto Assets Exchange Association, announced plans in October to relax the stringent screening process for new tokens on exchanges, something Kishida requested back in June.
Private sector leaders have also expressed forward-looking sentiments. Sumitomo Mitsui Financial Group (SMBC) announced on Dec. 8 that it is exploring the use cases for soulbound tokens (SBTs).
Vitalik Buterin proposed using tokens to represent people's digital identities in his SBT proposal.