Japan has revised its tax laws to foster a more crypto-friendly business environment. Starting April 1, 2024, coinciding with the onset of the fiscal year, Japanese companies will experience a significant shift in how they are taxed on cryptocurrency assets.
Corporations will now be taxed solely on profits realized upon the sale of cryptocurrency, aligning with the existing tax framework for individual investors. This is a departure from the previous stance where companies faced taxation on paper gains — a valuation based on market fluctuations rather than actualized profit.
This strategic update, passed after a cabinet meeting on December 22, aims to encourage corporate investment in the burgeoning Web3 sphere. It could be a game-changer for businesses contemplating Web3 projects, potentially positioning Japan as a hub for digital asset innovation.
The reform arrives in the wake of increased collaboration in the crypto sector, highlighted by Circle’s partnership with Tokyo’s SBI Holdings to expand stablecoin use and Web3 services
The tax adjustment follows a year where Japan’s tax authorities reported a 35% increase in cryptocurrency-related tax violations, despite a noticeable decrease in the average value of undeclared crypto holdings
