Japan could soon have a unique split tax for crypto proceeds. This is because there is a proposal before the country’s ‘House of Councilors’ to have a reduction to 20 percent of crypto proceeds. Notably, the current comprehensive tax for trading profits is about 55 percent.
Representative Kenshi Fujimaki, a member of the House of Councilors has submitted the petition regarding virtual currency tax system revision. The petition essentially allows people in Japan to directly state the Diet’s request for government affairs. He made this request at the end of the Diet session calling for the separation and reduction of proceeds tax. As such, this would be a significant step toward virtual currency tax reform and bring some stability to the industry.
This system allows people to easily participate in legislation. Accordingly, the petition to the chairperson of each House is furtherance of this space. Rep. Fujimaki is also a big proponent of reforming how the virtual currency taxation system works.
What the Petition Entails
The petition essentially has four issues of concern. They are as follows:
- A proposal to change the trading profit for virtual currencies from comprehensive tax at a maximum rate of 55 percent to separate tax at 20 percent.
- A proposal to effectively enable carry-on deductions of loss on the virtual currency.
- Additionally, three exemptions from buying and selling virtual currency.
- A proposal to make tax-free settlement of virtual currency at stores etc. tax-free
At the moment, virtual currencies fall under miscellaneous income under National Tax authorities regulations. This is different from transferred income since cryptographic payment is considered a payment means under the consumption tax and settlement law.
Why the Petitioners Want the Change
According to the petitioners, the main cause for reform is that virtual currency should be split taxed at 20 percent to represent transferable income. Indeed, virtual currency is multifaceted and can be a means of payment, financial instruments like stocks and even mutual funds.
This petition did not go through but Representative Fujimaki still reveled at the significance of the petition;
“I was not adopted without the consent of other parliamentarians at the House of Councilors Finance and Finance Committee, but I think that it had the effect of showing our strong demand to the government.”
Besides, the representative lauds the fact that this is a petition by the people and not the members of the legislature. This, to him, is definitely a great step for democracy and participation in change.
The growth of the virtual currency industry and the corresponding awareness and interest makes legal developments necessary. This is because there are end-user needs and the petition can be a great survey of public opinion. The House of Councilors has also recently had questions about the Cryptographic Asset ETF to the FSA and the National Tax Agency.
The regular parliament closed on the 26th of June, Subsequently, the announcement of the next elections will take place on July 4th. Even though the National assembly is not in session at the moment, this is a conversation that will continue to happen. The fact that Japan, one of the leading crypto markets in the world, is having this debate certainly makes the short-term regulatory global landscape for crypto even more interesting.