Japan’s crypto tax system may see a significant overhaul in 2025, as virtual currencies have been officially included in the government’s tax reform plans. The ruling Liberal Democratic Party recently finalized an outline for tax reform, following a meeting on December 20. This development comes as a relief for mainstream crypto investors in Japan who have been burdened by high tax rates, with some facing rates as high as 55% on gains and even a staggering 110% for inheritance tax on crypto assets.
House of Representatives member Junichi Kanda shared the news about the tax reform plans on social media platform X. Industry players and crypto holders have been advocating for a revamp of the current system, with calls for a separate 20% rate for crypto gains. This proposed rate would also allow for the offsetting of losses through a carryover system. However, Prime Minister Shigeru Ishiba has expressed doubts about cryptocurrencies as an asset class, which could impede efforts for reform.
Former minister for digital transformation Takuya Hirai submitted a proposal through the Financial Services Agency to consider crypto assets as an asset contributing to the national economy, rather than miscellaneous income. The proposal, which included a separate tax scheme for crypto, was well-received by Finance Minister Katsunobu Kato. While concrete steps towards reform are anticipated, the current tax laws in Japan remain complex and challenging to navigate, much like the Tokyo Metro subway system.
Overall, the inclusion of virtual currencies in the government’s tax reform plans signals a positive step towards addressing the high tax rates faced by crypto investors in Japan. With calls for a separate tax scheme for crypto assets gaining momentum, there is hope for a more favorable tax environment for crypto holders in the future. Despite some skepticism from government officials, the push for reform continues, fueled by the desire to create a fair and efficient tax system that supports the growth of the crypto industry in Japan. As the debate over crypto taxation in Japan continues, it remains to be seen how the government will ultimately address the challenges faced by crypto investors in the country.
