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The 2025 tax system reform outline clearly states the discussion of “re-examining the tax system for virtual currencies” and shows the path of separate taxation.
Author: CoinPost
The tax system investigation committees of Japan’s Liberal Democratic Party and Komeito Party recently clarified the outline of the 2025 tax system reform, proposing to review the tax system for crypto assets (virtual currencies) to pave the way for separate taxation. According to the reform proposal, the tax rate on crypto assets may be reduced to 20% in the future, while allowing for the offset of gains and losses.
However, the implementation of the reform still requires necessary legal preparations, including investor protection, transaction suitability requirements, and the obligation of exchanges to report transaction content to tax authorities, etc.
Parliamentarian Takuya Hirai from the LDP’s Digital Headquarters has submitted an urgent proposal to the Financial Services Agency, suggesting that the profits from crypto asset transactions be included in the scope of separate taxation as soon as possible, while improving the regulatory framework to ensure that crypto assets play a role in promoting the national economy.
Analysts pointed out that this will help attract more domestic and foreign enterprises and investors, promote the development of Japan’s Web3 industry, and enhance its international competitiveness.
This move marks that the Japanese government is seriously considering improving the tax system for crypto assets to enhance international competitiveness in the Web3 field. At present, Japan classifies the profits from crypto asset transactions as “miscellaneous income,” with the highest tax rate reaching up to 5%.
This high tax rate, the taxation of transactions between cryptocurrencies, and the inability to offset gains and losses across years are considered the main reasons hindering innovation in the Web3 field, leading to a large number of talents and start-ups flowing overseas.
Although the reform plan is still in the “review stage” at present, the explicit mention of this issue in the tax system reform outline indicates that Japan has taken an important step in improving the tax system for crypto assets.
TaxDAO’s Commentary:
Japan’s cryptocurrency tax policy is quite stringent. The current policy in Japan classifies the profits from crypto transactions as “miscellaneous income,” with a maximum tax rate as high as 5%, and the exchange between cryptocurrencies is also taxed, without allowing for the offset of gains and losses across years.
These regulations are undoubtedly a heavy burden for individual investors and enterprises in crypto assets. Japan’s tax reform plan proposes to explore the “separate taxation” of crypto transaction profits.
In simple terms, it means to handle the profits from crypto asset transactions separately, which may be subject to a fixed tax rate (expected to be around 20%) and allow for the offset of gains and losses across years.
This is good news for investors to reduce their burden, and for enterprises, it means greater financial flexibility and more predictable tax planning. In a horizontal comparison, at present, Japan has missed many opportunities in the Web3 track. In contrast, Singapore, due to its zero capital gains tax policy, has attracted a large number of Web3 projects and funds, becoming a popular destination for global Web3 innovation.
Japan apparently hopes to attract projects and talents and enhance its competitiveness in the Web3 field by adjusting tax policies. In fact, this tax reform is not the first effort made by the Japanese government to develop the Web3 industry. Not long ago, in August 2024, Japan held the “Web X” conference, where Japanese Prime Minister Fumio Kishida spoke as a special guest, generating a good response.
If this tax reform plan is implemented, its effect will be immediate. On the one hand, domestic enterprises, especially small start-ups, will benefit the most, because the reduction of tax burden allows these enterprises to have more resources to invest in innovation and operation, enhancing market competitiveness.
On the other hand, this tax reform plan will improve Japan’s image among international investors, attracting more overseas Web3 projects to choose Japan as their base in Asia, and may even likely trigger a crypto asset boom in Japan. However, before the tax reform is implemented, there are still some challenges to face.
For example, this tax reform still needs a series of supporting measures, such as improving investor protection mechanisms, strengthening tax transparency, and enhancing transaction compliance.
In addition, the tax reform may reduce tax revenue in the short term, which may cause concerns among the public and relevant departments. Moreover, Japan’s policy implementation pace is relatively conservative, and whether it can truly seize the global window period of the crypto industry and even the entire Web3 industry remains to be seen.
In the future, when we look back, this tax reform may become an important turning point for Japan’s Web3 industry. This is not only an incentive for enterprises and investors, but also a statement: Japan does not want to continue missing opportunities, but hopes to embrace the Web3 industry more actively. If the promise can be fulfilled, perhaps in the next bull market, Japan will become the focus of global investors.