Japan's main ruling political parties advocate the idea of taxation policies focused on cryptocurrencies.
In Japan, digital assets or cryptocurrencies are given preference and are considered under the Payment Services Act. According to the Payment Services Act, cryptocurrency is defined as a payment method that can be used for transactions with unspecified recipients without being tied to traditional currencies.
Despite the growing interest in cryptocurrencies among the Japanese population, there is no cryptocurrency tax policy for cryptocurrency traders.
Under existing law, all cryptocurrency traders must pay cryptocurrency taxes under the “other income” section of the country’s tax regulations.
This means that those with lower incomes may end up paying only 11% of their cryptocurrency trading profits, while those with higher incomes may end up paying more than 50%.
To address issues related to the cryptocurrency trading population and VCs interested in investing in cryptocurrency projects, Japan's main political party, the Liberal Democratic Party, is calling on the government to make rapid changes to cryptocurrency taxes.
According to the party's statement and a report by Japanese media outlet Coinpost, the party's web3 project team shared a 'white paper' on April 12.
The team proposed that profits and losses from cryptocurrency trading should be taxed separately and reported by individuals themselves. He also suggested that the suggestion be taken seriously.
What is noteworthy is that last February, the Japanese government announced plans to allow venture capital companies to invest in domestic cryptocurrency companies.
Now, it appears that large corporations are putting indirect pressure on the ruling government to introduce cryptocurrency-friendly laws so that they can participate at a better level in this innovative sector.
Hong Kong, Japan, cryptocurrency
In particular, Hong Kong is a popular travel destination for Japanese tourists. Both these jurisdictions have a better relationship in terms of many factors.
In mid-2023, Hong Kong legalized cryptocurrency trading under a new cryptocurrency regulatory framework. Additionally, Hong Kong financial regulators are currently also participating in applications for a Bitcoin spot ETF.
The Hong Kong government's high level of inclination toward Bitcoin and the cryptocurrency sector will certainly put great peer pressure on the Japanese government to adopt this innovative sector as quickly as possible, subject to appropriate rules and laws.
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