Japan’s tax regime is driving crypto firms out of the country

Japan’s tax regime is driving crypto firms out of the country

Japan’s recently approved tax plan could have a negative impact on the country’s crypto sector.

Japan’s recently approved tax plan could have a negative impact on the country’s crypto sector. Crypto firms are now asking authorities to change tax policies they described as driving them out of the country.

Japan approved a fiscal 2022 tax plan on December 10 that continues to tax the token list, according to Coindesk. This means that issues will have to pay taxes once the tokens are listed, even if they don’t sell.

The government will also tax tokens held in cash and not circulating in exchange if their market value appreciates. This means that if the project, especially the startup startups, cannot pay the taxes, they will be forced to sell more tokens to the public to raise the necessary funds to pay the taxes, which will ultimately affect the trajectory and the health of the project and negatively. impact on the price of the token. In addition, the transmitters and recipients of airdrops will be taxed.

According to certified tax account Kenji Yanagisawa, the tax rate for issuers is around 35%. He added that this tax regime “will not change for at least a year”.

However, this tax regime has caused some crypto companies to shut down their operations in the country and relocate elsewhere. According to Mai Fujimoto, the founder of blockchain and crypto consulting firm Gracone, at least eight projects have already left Japan.

Sota Watanabe, the founder of multi-channel decentralized application (dapp) hub Astar Network, said high taxes and unclear regulations are problems in Japan. It decided to set up an entity in Singapore in 2020 and dissolved its Japanese operations in 2021. It also set up a program to help Japanese crypto companies migrate to Singapore.

Ryodan Systems AG CEO Leona Hioki said he previously thought Japan could foster a local crypto industry. “My expectations seem wrong,” said the CEO and left for Switzerland this year.

Crypto investors are at a disadvantage compared to their stock counterparts when it comes to taxation. Since they fall under miscellaneous income, tax rates for crypto gains can be as high as 55% based on individual income, while stock gains are only taxed at 20% for individuals.

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