As published on beincrypto.com, Thursday 25 August, 2022.
The Japanese government’s Financial Services Agency (FSA) and the Ministry of Economy, Trade, and Industry (METI) will review corporate taxation for crypto companies from 2023.
The Japanese government has announced that it will begin reviewing the crypto tax rules for corporations from 2023. Local media outlets reported that the Financial Services Agency (FSA) and the Ministry of Economy, Trade, and Industry (METI) would be reviewing how to tax businesses that use crypto “for the purpose of nurturing startups.”
The review is focusing on crypto startups that are issuing tokens to raise funds that are then used to build the business. The regulators say that the new system would consider if companies that own crypto assets will only be taxed when profits are generated from sales. They also say that the agencies do not wish to hinder the growth of startups and discourage them from working inside Japan.
The report quotes Rakuten Group Chairman and President Hiroshi Mikitani, who notes that crypto businesses move to places like Japan “because it’s stupid to start a business in Japan.” Many crypto companies operate out of countries like Singapore and the United Arab Emirates because of the more accommodating regulation.
Member of the House of Representatives and Liberal Democratic Party Taira Masaaki also acknowledged the development on Twitter. Masaaki terms himself the “Web3 Project Team Chairman.”
Crypto advocates in Japan have called for tax cuts in July 2022 to stem the talent exodus that Mikitani was referring to. Currently, Japan imposed a 30% corporate tax on cryptocurrencies, and they believe that this will lead to a brain drain in the country. Those calling for these changes also said that Japan was not an easy place to do business.
Crypto groups in Japan have also released a fiscal 2023 tax reform request, which calls for a tax rate of 20%. The issues they identify are a lack of consistency within the system, the need to establish a web3 presence, and the facilitation of tax filings.
Japan’s METI has also established a web3 policy offer to better organize and direct this new effort. One of the country’s biggest banks, Sumitomo Mitsui Banking Corporation, has also announced a foray into NFTs and web3. Japanese trust banks have also received approval to manage crypto assets later this year.