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

Japan’s Financial Services Agency has announced intentions to amend the country’s tax code, potentially lowering the tax rate on cryptocurrency holdings by 2025.  

Japan’s financial authority has announced plans for a major revision of the tax code in fiscal year 2025, including provisions for crypto assets that might be taxed at a reduced rate.

In its tax reform suggestion on August 30, Japan’s Financial Services Agency (FSA) emphasized cryptocurrency assets, arguing that they should be recognized as ordinary 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,” noted the Financial Services Authority (FSA).

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

According to crypto accountants TokenTax, crypto gains in Japan are now taxed as miscellaneous income at rates ranging from 15% to 55%.

 The highest rate of 55% applies to incomes above 200,000 yen ($1,377), but it varies depending on the individual’s income tax category. In comparison, profits from stock trading are taxed at a maximum of 20%.

Corporate cryptocurrency holders must pay a fixed 30% tax rate on their holdings at the end of the fiscal year, even if they did not profit from a sale.

Government departments submit tax reform suggestions to the ruling party, which then forwards them to a tax system research committee and the national assembly for consideration. The change can only become law if it is accepted by both houses of the Japanese government: the House of Representatives and the House of Councillors.

Cryptocurrency advocates want tax reform 

For long years, crypto sector advocates in Japan have pushed for a change of the national tax structure for digital assets.

In 2023, the Japan Blockchain Association (JBA), a pro-crypto lobbying group, formally requested that the government reduce the tax rate on cryptocurrency holdings.

On July 19, the organisation also requested tax reform on crypto assets for the fiscal year 2025 in an effort to stimulate further growth in the country’s crypto sector. Among its recommendations were a flat 20% tax rate on cryptocurrency and a three-year loss carryover deduction.  Despite these efforts, the requests have not yet resulted in any policy changes for the Japanese business.

Buy and sell crypto in minutes with 0.20% trading fees at Bitdenex  Exchange.