The Japanese government has approved a 2024 tax regime amendment aiming to exempt corporations from unrealized crypto gains tax if they hold the assets long-term.
Currently, third-party-issued cryptocurrencies held by companies are treated as profits or losses based on market value versus book value at the fiscal year-end.
The amendment proposes excluding mark-to-market valuation for long-term holdings, ensuring companies are taxed only on profits from cryptocurrency sales.
The revision, slated for the fiscal year 2024, requires submission to the January 2024 Diet session and approval by the Lower and Upper Houses.
The proposal, awaiting debate in the Diet (Japan’s parliament), aims to eliminate corporate taxation on the market-book value difference of crypto assets issued by other firms.
If enacted, this approval would address a disparity in the treatment of third-party and holder-issued assets, potentially removing a hindrance to Web3 businesses in Japan. The government, viewing the industry as vital for economic reform, is actively considering input from industry associations to foster development.
The move represents a shift from traditional bureaucratic-driven policy development, with politicians now taking a more central role. Web3 companies have faced challenges due to early tax liabilities, impacting business development and prompting some to relocate overseas.
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