[NEWS] National Tax Agency announces review of end-of-period mark-to-market taxation of crypto assets

On the 20th, the National Tax Agency announced a partial revision of the corporate tax.

This revision also includes provisions regarding crypto assets (virtual currencies). With this announcement, crypto assets held by companies can now be excluded from end-of-period market valuation tax if certain conditions are met. This is expected to make it easier for crypto asset-related businesses to expand their business.

Until now, in Japan, companies have been subject to taxation even if they held crypto assets and had unrealized gains. This has been a long-standing issue, placing a huge burden on startups that issue their own crypto assets, leading to an outflow of human resources overseas.

According to the announcement by the National Tax Agency, crypto assets that meet the following conditions will be excluded from end-of-period market valuation tax.

1. The crypto assets are self-issued and held continuously from the time of their issuance.
2. The crypto assets have been subject to transfer restrictions by one of the following means from the time of their issuance.
3. Certain technical measures have been taken to prevent them from being transferred to other parties.
4. The crypto assets are the trust property of a trust that meets certain requirements.

This official announcement by the National Tax Agency has approved some of the tax reforms that the cryptocurrency industry has been calling for for many years.

Note that this only applies to cryptocurrencies issued by the company, and cryptocurrencies issued by other companies will continue to be subject to taxation.

The relaxation of the requirements for holding cryptocurrencies issued by other companies will make it easier for overseas companies and venture capitalists to enter the market, which is believed to lead to the revitalization of the domestic market, and there are strong calls from the industry for improvements.

In addition, issues remain regarding taxation of individual cryptocurrency transactions, such as the introduction of separate taxation on declarations and the exemption from tax on profits and losses from the exchange of cryptocurrencies.

In response to the progress of improvements in the domestic cryptocurrency environment, LDP web3PT Chairman and House of Representatives member Masaaki Taira mentioned on Twitter that "the so-called 'Watanabe Sota problem (web3 talent migration to Singapore tax system)' will somehow be resolved."

As the next move, he expressed the view that it is necessary to remove the mark-to-market valuation of alliance governance tokens that are issued by other companies and are not intended for short-term trading.

Reference:Announcement, Taira's Twitter
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