Japan Prime Minister Shigeru Ishiba calls crypto ‘extremely important’, claiming it has the potential to solve the current financial and social problems of the country. His shifted attitude toward crypto ahead of the 2025 Japan crypto tax review could relax the country’s strict crypto tax rate.
Crypto regulations and associated tax rates are very strict in Japan compared with other countries, hindering the country’s ability to compete globally. To enhance their digital innovation and increase competition, the government is aiming to bring a less regulated approach towards crypto. According to reports, Japan’s Finance Minister has promised to finalize the country’s crypto tax rate by the end of June 2025. The PM’s statement of crypto as an ‘extremely important’ hints at a less strict tax rate.
Responding to the reporter’s question on the strict crypto tax rate in the country, Shigeru responded, by saying he believes that by utilizing the potential of cryptocurrency the country can solve existing financial and social problems and attain global growth. He highlighted the importance of a healthy Web3 development for the country’s financial and social stability.
With the upcoming japan crypto tax review, the tax rate will be relaxed, increasing the number of crypto investors in the country, enabling innovations in digital finance and thereby contributing to the country’s development.
Japan to Finalize Crypto Tax by June 2025
In Japan, crypto assets fall under miscellaneous income, making an individual pay a crypto tax of up to 55%. Last year, the Democratic Party made a proposal to change the tax rate, claiming it is very high. The proposal recommends reducing the tax rate to 20%.
The Finance Minister, Katsunobu Kato vowed that the country’s crypto tax rate will be finalized by June. The financial regulators are in the discussion of 2025 crypto tax reform, and finding necessary legal arrangements for relaxing tax rates. Once the process is completed, the Finacial Service Agency will verify the system, finalizing it by June.
In December 2024, the Liberal Democratic Party Research Council made a proposal for making crypto an asset, which has the potential to contribute to the country’s economy. The proposal demanded a separate crypto tax according to the profit and loss made from crypto transactions. This proposal was made just before the announcement of tax reform.
Apart from the relaxation of the tax rate, the Finance minister opened up about the ongoing discussion of redefining how crypto assets are defined in the country. Crypto assets are seen more as a mode of payment than an investment in Japan. He also added that various stakeholders are providing inputs to regulators regarding the matter.
Why a New Crypto Tax Law?
The existing crypto tax law of Japan necessitates crypto traders to report their crypto profits in their income tax return reports, resulting in an increased tax rate. The increased tax rate has become a burden and prevented many from investing in the promising landscape of crypto. Crypto investments will boost the country’s development and act as a solution for financial and social concerns, by applying a high tax rate, the government is hindering the country’s global competitiveness in the digital economy.
The Finance Ministry is planning for an amendment in the Payment Service Act to consider crypto as an asset and not merely a payment mode. This change could bring a more sophisticated approach to crypto in Japan, increasing the number of crypto investors in the country.
Also Read: How is Cryptocurrency Taxed?