Financial regulator in Japan suggests relaxing corporate tax regulations for crypto

In support of Prime Minister Fumio Kishida’s initiatives to revive the economy, Japan’s financial authority suggested relaxing corporate tax regulations for crypto assets as well as lowering fees for individual stock investors.

Companies should not be required to pay taxes on paper profits on cryptocurrency they hold after issuing them, the regulator suggested in its annual proposal for a revision to the tax code, which was made public on Wednesday. A scheme that provides tax benefits to individual investors was also called for to be strengthened by the Financial Services Agency.

The actions promote Kishida’s “New Capitalism” idea, which aims to strengthen the third-largest economy in the world. He has promised to double household wealth and to assist the expansion of the nation’s so-called Web3 firms.

Crypto advocacy organizations have been pushing for changes, arguing that Japan’s high corporation taxes have made it more difficult for companies to set up there and have driven some of them to Singapore and other countries. The current corporate tax rate for cryptocurrency profits, including unrealized gains, is around 30%.

By increasing investment limits and making the scheme permanent, the FSA intends to broaden a tax break program known as the Nippon Individual Savings Account for ordinary investors. A portion of an individual’s dividends and investment earnings may be excluded from capital gains tax over time under NISA.

Japan encouraging stock and crypto investments

The action is the latest in years of initiatives to encourage people to spend their money for worthwhile endeavors, like stock investing for the benefit of the overall economy. According to the data by the Bank of Japan, households in Japan maintain around half of their 2 quadrillion yen ($14.5 trillion) in cash and deposits.

The government is intensifying its efforts to bring a clear set of regulations for the citizens. Before this, in June, Japan planned to float a bill to allow seizure of crypto linked to crime. Moreover, it also passed a stablecoin bill that enshrines investor protection with respect to unforeseen events with the instability in stablecoin sector.