[NEWS] Government and ruling party to exempt corporations from taxation on continued holding of cryptocurrencies issued by other companies

On the 5th, the Liberal Democratic Party and Komeito held a tax system investigation committee to assess requests for tax reform from each ministry. It was revealed that the tax system on crypto assets (virtual currencies) will also be partially revised. The Nihon Keizai Shimbun reported on the 6th.

According to the report, crypto assets issued by other companies that are continuously held by corporations for purposes other than short-term trading will be excluded from the end-of-year mark-to-market taxation.

It is expected to be included in the ruling party's tax reform outline for fiscal 2024, which will be announced in the middle of this month.

The ruling party's tax reform outline for fiscal 2023 includes a provision that crypto assets held by corporations that meet certain conditions will be excluded from the end-of-year mark-to-market taxation. Specifically, the targets are self-issued crypto assets that are continuously held from the time of issuance, and those that are subject to transfer restrictions, etc.

By excluding crypto assets issued by other companies from the end-of-year mark-to-market taxation, which was revealed this time, the burden on companies will be reduced.

This measure is also thought to be aimed at preventing capital outflows overseas. By improving this environment, the government aims to lay the groundwork for the realization of the nation's asset management strategy.

Requests from self-regulatory organizations are incorporated

In July of this year, the Japan Virtual Currency Exchange Association (JVCEA) and the Japan Virtual Currency Business Association (JCBA) jointly submitted the "Request for Tax Reform on Crypto Assets in 2024" to the relevant government ministries and agencies. In August, the Financial Services Agency and others announced the "Request for Tax Reform in 2024," which called for a review of the end-of-period fair value taxation on "crypto assets held by third parties."

Note that self-regulatory organizations related to crypto assets, such as the JVCEA, have called for the introduction of separate taxation on individuals and carry-forward deduction of losses, as well as the abolition of taxation when exchanging crypto assets, but neither of these have been included this time.

Following on from last year, it is expected that the government will first begin reviewing the crypto asset tax system for corporations, and then proceed with discussions on the tax system for individuals.

Reference:Nikkei Newspaper
Image: Shutterstock

Related articles

The Financial Services Agency announces its request for tax reform for fiscal year 2024, calling for a review of cryptocurrency taxation

The Japan Association of New Economy submits proposals for tax reform for fiscal year 2024 to the government