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Tim Alper
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Tim Alper
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Japan’s ruling party, the Liberal Democratic Party (LDP), is still pushing for crypto tax reform in spite of cautious recent statements from Prime Minister Shigeru Ishiba.
The Japanese media outlet CoinPost reported that the party’s Headquarters for the Promotion of a Digital Society is set to outline its plans to change the way crypto is taxed in the nation before the year is out.
Crypto Tax Reform Proposals Must Roll Out Before End of 2024, Says Minister
The LDP’s Headquarters for the Promotion of a Digital Society team met with the Financial Research Council on December 18.
The parties held a “discussion” on “urgent proposals” for turning crypto into “assets that contribute to the Japanese economy.”
The party has been working on web3 policy and tax reform-related matters since the premiership of Fumio Kishida.
The media outlet reported that the LDP’s digital policymakers will “prioritize” the production of a “tax reform outline” in the last days of 2024. CoinPost wrote:
“This outline will set out a basic policy for tax reform in the following year.”
Countdown to Trump Presidency
However, the outlet warned that if the policymakers failed to produce a proposal for crypto tax, it would be “extremely difficult to realize any change in 2025.”
In Japan, policy chiefs usually submit tax reform proposals at the end of the calendar year. They then submit these to parliament the following year.
The Japanese Minister of Digital Affairs Takuya Hirai noted that the timing of the discussion was important, with the Donald Trump administration taking power in Washington in January 2025.
“I believe that this proposal is important for the government. We must take a comprehensive, clear stance on taxes, regulations, and cybersecurity before the Trump administration takes office.”
Japanese Minister of Digital Affairs Takuya Hirai
Experts think Tokyo wants to cement any new changes in Japan’s cryptocurrency policy by the time Trump takes office.
These changes could include tax reform, in addition to new regulations and cybersecurity laws.
The Headquarters for the Promotion of a Digital Society forms policy recommendations for the government’s consideration.
However, Ishiba’s office is under no obligation to accept or incorporate these recommendations.
Indeed, in recent weeks, the Prime Minister refused to commit to tax reform or the launch of Bitcoin spot ETFs in Japan.
Ishiba has appointed lawmakers known to be in favor of crypto reform to ministerial positions. He also mentioned blockchain technology in his election manifesto.
However, voices outside the LDP have also called for “urgent” reform. Opposition leaders have also warned repeatedly that capital is flowing out of the country as a result of an “unfair” taxation system for crypto investors.
While many other nations charge traders flat capital gains taxes at rates of about 20%, Japan’s tax rules instead oblige crypto traders to declare their crypto profits on their annual income tax declarations.
They must file crypto trading profits under “other income.” And that means that the nation’s highest earners can end up paying up to 55% on their crypto trading revenues.
The Headquarters for the Promotion of a Digital Society said its proposal was of “urgent” importance.
On X, Hirai wrote that the LDP had been working on crypto legislation “faster” than any party “in the world.”
