Japan’s finance regulator calls for lower crypto taxes in 2025

Sep 4, 202406:09 UTC

Japan’s financial regulator has released plans for a comprehensive overhaul of the tax code for fiscal year 2025, including provisions for crypto assets that could lower their tax rate.

In the Aug. 30 request for tax reform, Japan’s Financial Services Agency (FSA) highlighted crypto assets, pushing for them to be treated like traditional financial assets that the public can invest in.

“Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public,” the FSA wrote.

“It is necessary to consider this issue from the perspective of whether it should be treated as such.”

According to crypto accountants TokenTax, crypto profits in Japan are currently taxed as miscellaneous income between 15% and 55%.

The highest rate of 55% can apply to earnings over 200,000 Japanese yen ($1,377), but it does vary depending on the individual’s income tax bracket.

In comparison, profits earned from stock trading only incur a tax rate of 20% at the highest levels.

Corporate crypto holders must pay a flat 30% tax rate on their holdings at the end of the financial year, even if they haven’t made a profit through a sale.

Government ministries submit tax reform requests to the ruling party, which then passes them to a tax system research committee and the country’s national legislature for consideration.

The reform is only passed into law if approved by both houses of the Japanese government: the House of Representatives and the House of Councilors.

Crypto advocates want tax reform

Advocates of the crypto industry in Japan have been pushing for a revision of the national tax regime for digital assets for several years now.

The Japan Blockchain Association, a pro-crypto lobbying group, formally requested the government lower the tax rate on crypto assets in 2023.

On July. 19, the group also submitted a request for tax reform on crypto assets for the 2025 financial year in a bid to foster further growth in the nation’s crypto sector.

Among its proposals was a flat 20% tax rate for crypto and a three-year loss carryover deduction.

Despite these efforts, the requests have so far failed to yield any policy changes for the industry in Japan.