The Japanese government has announced a groundbreaking Tax Reform Proposal for the fiscal year 2024, reshaping the tax landscape for companies holding crypto assets issued by third parties. This significant decision emerged from a Cabinet meeting on March 22, where comprehensive changes were made to enhance the tax framework governing crypto assets.
A notable aspect of the tax reform is the exclusion of year-end market value taxation for companies holding third-party issued crypto assets. Previously, these companies were taxed at year-end based on the market value, which often differed from the book value. The latest change eliminates this market valuation for continuously held assets, signaling a paradigm shift.
As a result, companies will now be taxed only on the gains from the sale of cryptocurrencies and tokens, aligning their tax treatment more closely with that of individual investors. This transformative change significantly reduces the tax burden associated with holding and managing crypto assets by companies, encouraging participation in the crypto space.
The tax reform not only responds to the evolving dynamics of the crypto market but also addresses demands presented by the Japan Crypto Currency Business Association (JCBA) during their presentation for the 2024 tax reform.
Beyond immediate effects, the change is expected to stimulate Web3 initiatives and enhance the appeal of domestic ventures utilizing Blockchain technology, both domestically and internationally.
In addition to crypto-centric changes, the FY2024 Tax Reform Proposal includes broader tax adjustments, such as a plan to reduce income and resident taxes by 40,000 yen per person after June 2024. The comprehensive package introduces tax reductions for companies and a new tax system dedicated to innovation. The overall impact of these measures signifies a substantial decrease in revenues for national and local governments, marking one of the most significant fiscal adjustments since the fiscal year 1989.