Japan’s corporate tax policy encourages cryptocurrency companies to leave the country

Cryptocurrency companies in Japan face high corporate taxes, which is pushing them to change jurisdictions. The income of individual investors is taxed up to 55%.

Japan’s ruling coalition on December 10 approved a tax plan for fiscal 2022, according to which the listing of tokens is still subject to taxation. Tax implications arise from the moment the tokens are offered on the market. At the same time, issuers are obliged to pay tax regardless of the fact of sale, and the tax rate is 35%.

Also, a positive exchange rate difference is subject to taxation when storing tokens on the balance sheet of a cryptocurrency company. No less stringent rules have been adopted for the income of private investors. So, their profits can be taxed up to 55%. By comparison, the tax rate on stock gains is around 20% for individuals.

The Japan Cryptocurrency Trading Association (JCBA) has been advocating for tax cuts on cryptocurrency for several years now. However, Japan’s corporate tax policy does not change dramatically and the lack of support for the development of the industry prompts the founders of a number of cryptocurrency projects to transfer their business to other jurisdictions.

Mai Fujimoto, founder of blockchain and cryptocurrency consulting company Gracone, said she is aware of at least eight projects that have left Japan. The country’s regulators see no need to support cryptocurrency companies due to the high volatility of digital assets. In their opinion, the cryptocurrency market attracts only speculators.

Earlier, the National Tax Administration of Japan said it would focus on citizens and organizations’ compliance with tax guidelines and end cryptocurrency tax evasion.