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

On the 31st of last month, the Financial Services Agency released its tax reform requests for fiscal year 2024. In the request, a review of the end-of-period mark-to-market taxation on "crypto assets held by third parties" was mentioned as a joint request with the Ministry of Economy, Trade and Industry.

The request cited the current problem of crypto assets held by third parties being subject to mark-to-market taxation. As a result, a situation has arisen in which taxation is being imposed even though no profit or loss has actually been generated.

As a request item, it was stated that a review of the mark-to-market taxation on crypto assets continuously held by third-party corporations other than the issuer should be promoted from the perspective of promoting companies that use blockchain to improve the environment for promoting Web 3.0. In addition, as another request item, it is requested that tax measures for tokenized corporate bonds be equivalent to those for book-entry transfer bonds, etc. are applied.

In July of this year, the JVCEA (Japan Cryptocurrency Exchange Association) and the JCBA (Japan Cryptocurrency Business Association) jointly submitted the "Request for Tax Reform on Crypto Assets for Fiscal Year 2024" to the Financial Services Agency and other government ministries and agencies.

Among them, as a request for a review of corporate tax, they requested that crypto assets that corporations hold continuously for purposes other than short-term trading be exempt from end-of-period mark-to-market taxation. JCBA points out that these issues are an obstacle to starting businesses using blockchain.

At the same time, JBA (Japan Blockchain Association) also submitted a request, calling for the abolition of end-of-period unrealized gain taxation for corporations that hold crypto assets issued by third parties.

Both parties also requested the introduction of separate reporting taxation and loss carryover deduction, as well as the abolition of taxation that occurs when exchanging crypto assets.

In the recently announced Financial Administration Policy for the 2023 fiscal year, the FSA also announced a policy to strengthen efforts in the crypto assets and Web 3.0 fields in order to realize the government's goal of becoming an asset management nation.

At that time, it also stated that the current crypto asset tax system would be reviewed. Both of them mentioned tax reforms for businesses, and first of all, they will prioritize creating an environment that makes it easier for companies to enter the Web 3.0 field.

As countries around the world regulate and promote cryptocurrencies and the digital realm, Japan is also gearing up to further improve the environment.

Source:Financial Services Agency
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