In a bid to reform Japan’s cryptocurrency taxation, Yuichiro Tamaki, leader of the Democratic Party for the People (DPP), took to social media on October 21 (JST) to outline his party’s proposals aimed at lowering the country’s crypto tax by 20% rates if he gets elected.
As the nation gears up for its general election on October 27, Tamaki seeks support from digital asset enthusiasts to help address what many view as excessive taxation on cryptocurrencies.
Tamaki’s proposal consists of four main points designed to promote the use of cryptocurrencies and digital assets:
- Tax Rate Reduction: Currently, cryptocurrency gains are taxed as miscellaneous income at rates ranging from 15% to a staggering 55% for high earners. Tamaki’s plan proposes a flat tax rate of 20% for crypto profits, aligning them with taxes on stock market gains.
- Loss Deductions and Crypto-to-Crypto Exemptions: The proposal includes provisions to allow individuals to deduct losses from their taxable income and to exempt crypto-to-crypto exchanges from triggering tax events. There will be no tax when exchanging crypto assets with other crypto assets, Tamaki stated, aiming to simplify the tax reporting process.
- Promotion of NFTs and Web3 Economy: The DPP aims to integrate non-fungible tokens (NFTs) into governance and support the development of a robust Web3 ecosystem, allowing for innovative applications of digital assets.
- Increased Leverage and Cryptocurrency ETFs: The plan also proposes to enhance allowable leverage rates for crypto trading from 2x to 10x and introduce crypto ETFs in Japan.
While Tamaki’s pledges may sound promising, they come at a time when many Japanese citizens are grappling with rising inflation and increasing living costs.
Despite the proposed 20% tax rate being significantly lower than the current rates, some critics argue that it still undermines the core advantages of cryptocurrencies, which were designed to offer an alternative to traditional financial systems.
Tamaki’s DPP currently holds just seven out of 465 seats in Japan’s House of Representatives, making the path to implementing these reforms uncertain. Despite this, Tamaki urges voters who believe in a separate 20% tax for crypto gains to support his party. “I would appreciate it if you could spread the word about these promises made by the Democratic Party for the People,” Tamaki said. in a translated post.
In addition to the DPP’s pledges, Japan’s Financial Services Agency is also preparing for a comprehensive overhaul of the nation’s tax code for fiscal year 2025, which may include provisions to lower taxes on digital assets.
Also Read: Italy to raise Capital Gains Tax on Bitcoin to 42% ahead of ‘Bitcoin Boom’
