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In a significant move for the cryptocurrency sector, the Japanese government has ratified a tax reform bill that exempts corporations from unrealized gains taxes on crypto assets. This reform, which has been under consideration since early December, is aimed at facilitating companies’ engagement with cryptocurrencies by removing the obligation to pay taxes on the fluctuating values of their crypto holdings.

Japanese Government Endorses Tax Reform to Abolish Unrealized Gains Tax on Cryptocurrencies

The Japanese cabinet recently passed the FY2018 tax reform, introducing various amendments impacting companies operating in the cryptocurrency domain. A pivotal aspect of this reform is the abolishment of the “unrealized gains” tax. Previously, this tax required companies to pay based on the annual valuation changes of their cryptocurrency assets.

Earlier in the year, the government had already approved a similar exemption for corporations regarding their self-issued cryptocurrencies. With the latest reform, the scope broadens to include cryptocurrencies issued by third parties, exempting companies from paying taxes on unrealized gains from these assets.

Despite this significant change, regular transactions involving cryptocurrency, including sales and purchases, will remain taxable. This decision is contrary to the requests of the Japan Crypto Asset Business Association, which advocated for the removal of taxes on crypto exchanges. Reports from local news sources suggest that this tax reform is projected to lead to a substantial decrease in tax-related revenues by June 2024, potentially the most significant reduction since 1989.

The reform aims to ease the process for corporations to integrate crypto assets into their financial reserves without incurring taxes merely for holding them. Japan stands as one of the few nations that implemented the unrealized crypto gains tax, a factor that led many companies to hold their crypto assets in other countries.

However, it’s important to note that this tax reform, although approved by the cabinet, still needs to be presented and passed by both houses of the Diet in the upcoming year.

We are interested in your thoughts about this development in Japan’s approach to cryptocurrency taxation. Please share your opinions in the comments section below.

Frequently Asked Questions (FAQs) about Japan Crypto Tax Reform

What is the recent tax reform approved by the Japanese government regarding cryptocurrencies?

The Japanese government has approved a tax reform that exempts corporations from paying taxes on the unrealized gains of their crypto assets. This means companies will no longer have to pay taxes based on the fluctuating values of their cryptocurrency holdings each fiscal year.

How does the new tax reform impact companies holding cryptocurrencies in Japan?

The reform allows companies to hold cryptocurrencies, including those issued by third parties, without incurring taxes on the unrealized gains. This change is expected to facilitate easier management and integration of crypto assets into corporate financial reserves.

Are all cryptocurrency transactions exempt from taxes under the new Japanese tax reform?

No, the reform only exempts companies from unrealized gains taxes. Regular transactions involving cryptocurrency, such as sales and purchases, will continue to be taxable.

What prompted the Japanese government to introduce this tax reform?

The reform was introduced to make Japan more competitive in the cryptocurrency market. Previously, the unrealized gains tax prompted companies to hold their crypto assets in other countries. The reform is expected to encourage companies to manage and hold their crypto assets within Japan.

What are the next steps for the implementation of this tax reform in Japan?

Although the Japanese cabinet has approved the tax reform, it still needs to be presented and passed by both houses of the Diet in the upcoming year to become law.

More about Japan Crypto Tax Reform

  • Japan’s Cryptocurrency Tax Reform Overview
  • Impact of New Tax Law on Japanese Companies
  • Understanding Japan’s Tax Changes for Crypto
  • The Future of Cryptocurrency in Japan Post-Reform
  • Detailed Analysis of Japan’s Crypto Tax Amendments


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CryptoKen December 26, 2023 - 1:20 am

wow, finally japan is making sense with crypto taxes, companies can actually keep their assets without worrying about the crazy tax swings every year!

SatoshiNakamotoFan December 26, 2023 - 12:32 pm

This is big news, but I’m still skeptical… will the Diet actually pass this? They’ve been pretty conservative about crypto till now.

YenInvestor December 26, 2023 - 1:13 pm

great move by Japan, this could really put us back on the map for crypto investments, other countries should take note.

TokyoTrader December 26, 2023 - 5:59 pm

finally a sensible decision, was tired of moving assets around to avoid that unrealized gains tax, hope the implementation goes smoothly.

BlockchainBabe December 27, 2023 - 12:41 am

not all good news though, regular crypto transactions are still taxed. They should’ve gone all the way and made it more friendly for small investors too.


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