Japan’s Financial Services Agency (FSA) has announced new tax reform requirements for fiscal year 2025, marking the first time virtual currency transactions are specifically addressed. The proposed reforms are part of a broader plan to enhance asset management and double asset income, aiming to simplify tax treatment for crypto assets.

At present, cryptocurrency trade is subject to a tax rate of as much as 55%, which many traders regard as too high. Currently, they are calling for the implementation of a flat tax rate of 20% on all cryptocurrency transactions. This proposal is in the part widely known as ‘A plan to double asset income and to realize a nation built on asset management’.

The tax reform requests, which were submitted individually by different ministries and agencies of the Japanese government, are being reviewed by the research committee of the governing party and the Japanese Diet. Even though these reforms were submitted quite recently, no decisions have been made yet on them.

New Tax Proposals Aim to Improve Investment Environment

Recently, voices for revising the rules of the corporate tax system regarding virtual currencies have been raised, though these transactions have not been officially addressed in the reform before. The document also recommends increasing the possibilities of offset loss for financial products.

Since the beginning of the year 2016, the loss offsets have been in the form of public bonds, and listed stocks yet derivatives were not allowed. The proposal also mentions extending offsets to derivatives and deposits in an attempt to open up the investment environment and increase the stock of household investment in funds in the growth fund.

At the recent Web3 conference, “WebX,” LDP Deputy Secretary-General Ogura Masanobu emphasized three key points for tax reform: furnishing rational grounds for the shifts, predicting tax income gains, and illustrating how crypto investment can contribute to asset generation. He also pointed out that investments satisfying the government’s criteria should be taxed separately, as virtual currencies contribute to asset growth.

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