Japan Announces End of Unrealized Profits Tax on Corporate Crypto Assets!

We know that many countries in the world are currently taxing crypto assets. But this time Japan has taken a groundbreaking and beautiful step. Japan recently announced that authorities would have taxed corporations on unrealized profits from cryptocurrencies allegedly issued by third parties. Allowed corporations to stop taxing current unrealized profits. So corporations no longer have to pay taxes on such unrealized profits. But the authority announced that the policy change is set to take effect on April 1, 2024, the start of Japan's fiscal year. Which is truly a groundbreaking step and a crypto-friendly decision.

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A recent Japanese cabinet meeting also announced that corporations will only be taxed when they sell their crypto assets. Simply put, corporations are taxed when they sell their own assets. The way in which corporations were currently levied was that they calculated the difference between the market value and the book value of the assets held at the end of each fiscal year, and tax was levied based on that difference. And corporations were taxed according to this principle. Currently this landmark decision is a relief for corporations as this amendment will significantly reduce the tax burden on corporations that manage and hold crypto assets. Their landmark decision is expected to attract more institutional investors to the country's crypto landscape.

Such a decision is expected to encourage increased adoption of Web3 technology and also support more local startups. Even such a crypto-friendly decision will lure many foreign crypto enterprises to the country, in addition to supporting local startups. But the implementation of such decisions must be submitted to a regular Diet session as per their rules and also approved by them in accordance with the laws of their country. Such a decision comes from a request made by the Japan Crypto Asset Business Association (JCBA).

To be honest, this is a very important step for cryptocurrencies at the moment, which is going to be implemented by the Japanese government from the next fiscal year. These changes in tax policies certainly signal a significant shift in the country's approach to regulating crypto assets. Hopefully such a move by Japan will result in a more favorable environment for crypto-related businesses. Hopefully such a move will balance the tax requirements. But an important point here is that Japan is one of the few countries in the world that maintains strict crypto regulations. The regulatory framework was important to protect FTX Japan's customer funds from the bankruptcy of the parent company. Anyway, hope their move will bring something good for crypto users.