Presently Japanese crypto firms pay a set 30% corporate tax rate on their holdings, regardless of whether or not they made a profit. Due to this stringent tax law over the past years, some local crypto firms reportedly chose to move their business elsewhere.
This development has impacted the country’s economic growth, and the LDP, having identified it as its primary task, wants to set things right.
The Liberal Democratic Party (LDP) of Japan addresses issues with administrative reform and collaborates with the U.S. to enact defensive and foreign policies.
The term Administrative Reform refers to multiple themes in the nation. An example of such themes is adopting measures like tax reform to stand the test of economic strain.
Japan Set To Ease Stringent Tax Rules
In line with its objectives to promote fast economic growth, the Japanese ruling party’s (LDP) tax committee held a meeting on December 15. The meeting was to deliberate on tax reforms. While at it, they approved an August-tabled proposal. The proposal seeks to remove taxes on crypto companies’ paper gains from issuance or custody tokens.
The Japanese government seeks to ease tax requirements on domestic crypto firms to facilitate the growth of the tech and finance sectors. Submission of more lenient crypto tax laws to parliament will commence in January and will take effect in the next financial year beginning in April.
LDP lawmaker and member of the Web3 policy office, Akihisa Shiozaki, spoke on the recent development in an interview with Bloomberg. Shiozaki noted that the move is a step forward in the economic reforms. He added that it would allow more companies to start token issuance businesses.
Japan’s Passion For Digital Currency Remains Unfazed Despite Crypto Winter
The new move from the Japanese government suggests it is keen to promote and foster the growth of the domestic crypto and Web3 sector. It also indicates that the current bearish trend in the crypto industry, including FTX’s crisis, did not affect its interest in blockchain technology.
Japanese Prime Minister, Fumio Kishida, hammered on the roles of NFTs, blockchain, and Metaverse in the county’s digital evolution in a statement in October. He cited practical examples using the digitization of national identity cards.
In October, the Japan Virtual and Crypto Assets Exchange Association announced plans to ease the strict screening process for listing tokens on exchanges. Kishida addressed this issue in June, asking the organization to loosen its stringent rules on the screening process.
Some top leaders in the private sector also shared the same thoughts with the Prime Minister. On December 8, Sumitomo Mitsui Financial Group (SMBC) announced an ongoing project to explore use cases of soulbound tokens (SBTs).
SBTs were part of Vitalik Buterin’s, co-founder of Ethereum, proposal to use tokens to represent people’s digital identity.