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Japan Revises Crypto Tax Rules

On June 20, Japan’s National Tax Agency (NTA) issued a notice confirming changes to the country’s corporate tax regulations. The notice confirmed that cryptocurrency issuers in the country would not be required to pay capital gains taxes on tokens they issue, or other unrealized gains if certain conditions are met.

Japan’s ruling Liberal Democratic Party (LDP) tax committee approved this proposal in December as the country looks to stem the outflow of cryptocurrency companies and startups which began with Mt. Gox’s bankruptcy in 2014.

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According to the NTA’s notice, this new exemption will apply to unrealized gains from holding applicable cryptocurrency continuously from the issuance date while the cryptocurrency is subject to transfer restrictions. The NTA explained that cryptocurrencies benefiting from this exemption would be excluded from the market value evaluation of a company’s assets.

Previously, Japan imposed heavy tax burdens on cryptocurrency companies, including subjecting token issuers to a capital gains tax of approximately 35% on their own tokens and other unrealized gains. Under current Japanese law, when a company holds crypto assets they are taxed as unrealized gains at the end of a tax period.

In the face of rapidly evolving cryptocurrency regulations in Japan and around the world, it pays to consult with those in the know. Kelman PLLC founding partner, Daniel Kelman, has been on the intersection of digital assets and the law since 2014 when he was “Goxxed” and flew to Japan to advocate for creditor interests during the Mt. Gox Bankruptcy. Involving lawyers fluent in digital assets to your business venture is the best way to stay on top of various regulatory requirements across markets and can help in avoiding costly legal battles.

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