Bitcoin is still trading at $44,000 and touched a peak of $45,000 this weekend. The major cryptocurrency, along with many others, is expected to see an upsurge after the world’s third-largest economy passed major cryptocurrency asset tax reforms for the new fiscal year.
The Japanese government has approved a comprehensive tax reform outline for FY 2024. Corporations that hold crypto assets now find a big relief, as only the profits generated from the sale of these assets will be taxed. Companies holding crypto assets will no longer have to pay valuation taxes.
Why Did Japan Provide the Crypto Relief?
According to reports, the Japanese Cabinet’s primary goal behind the reform was to give tax relief to the companies holding and operating crypto assets. Until now, third-party-issued virtual currencies held by domestic corporations underwent mark-to-market valuation at the conclusion of the fiscal year. This resulted in profit/loss recording based on the market and book value.
With the new reform, this approach to crypto asset valuation has been done away with. The tax reform approval was made at a cabinet meeting.
Additional Changes in FY 2024
The Japanese government has a series of updates in the pipeline for the economy. One of the most notable changes is the reduction in income and resident taxes by ¥40,000 per individual. While it will offer significant relief to the taxpayer, it is also expected to boost consumer spending.
Another major move is doing away with the annual unrealized gain tax that domestic corporations have been subject to. This will further lead to the implementation of loss carryover deductions and distinct taxes that crypto investors are subject to.
At the time of reporting, Bitcoin was trading at $45,641, Ether at $2267, BNB at $302, Solana at $94, and Tether at $1.
Japan’s Crypto Market
Japan’s crypto asset trading value in 2022 stood at ¥24.9 trillion. The margin trading value was ¥14.9 trillion while the transaction value was ¥10 trillion. The Japanese crypto asset market has grown at a fast pace in the past few years.
In 2022, there were over six million cryptocurrency accounts in the country, with over 3.7 million active ones. People in their thirties form the largest group of crypto account holders while those aged forties form the second largest group.
Previous Relaxations in Crypto Regulations
In 2022, the Japanese government eased the regulations to increase the number of listed coins on its domestic exchanges. In the past, stricter regulations related to new cryptocurrency launches have affected Japan’s crypto exchanges. This has resulted in Japanese exchanges listing fewer coins compared to their global counterparts.
The regulations were eased by the Japan Virtual and Crypto Assets Exchange Association. It is the self-regulatory authority in Japan governing its cryptocurrency market. The agency released a green list of crypto coins that can be listed by exchanges without completing the nation’s stringent screening process.
With the latest development, crypto asset holders can have a sigh of relief that they will no longer be subjected to mark-to-market valuation at the end of a fiscal year as long as they meet certain conditions.
References: Cryptotvplus.Com, Coinlive.Com, Crypto.Com, Statista.Com, Trade.Gov