Japan considers lowering crypto tax rates to 20% in 2025

Japan's Financial Services Agency (FSA) has proposed a significant overhaul of the country’s tax code for 2025, suggesting a flat 20% tax rate for cryptocurrency assets. 

This potential change would align crypto taxation with that of traditional financial assets like stocks, which currently have a maximum tax rate of 20%. 

In a recent proposal to the government, the FSA argued for treating cryptocurrencies as investment assets akin to publicly traded stocks. 

“Regarding the tax treatment of cryptocurrency transactions, cryptocurrency should be treated as a financial asset that should be an investment target for the public,” the FSA stated. 

This proposal aligns with the growing demand among crypto enthusiasts in Japan, who believe that high taxes on crypto profits are discouraging savings and investment. 

Currently, Japan imposes a tax rate ranging from 15% to 55% on crypto earnings, with the highest rate applying to profits exceeding 200,000 Japanese yen (around $1,377). 

This contrasts sharply with the 20% flat tax rate on profits from stock trading. 

Additionally, corporate entities face a 30% tax on unrealized crypto gains, applied annually, regardless of whether profits have been realized through a sale. 

The Japan Blockchain Association has been actively petitioning the government to revise these laws, arguing that the current tax structure poses a significant burden on investors and stifles industry growth. 

At a recent WebX Conference in Tokyo, Minister of Economy, Trade and Industry Takeru Saito expressed support for creating more use cases for cryptocurrencies by implementing tax reforms that would benefit start-ups. 

While the FSA’s proposal represents a move towards a more crypto-friendly environment, the decision ultimately rests with the tax system research committee and Japan's national legislature. 

If approved by both houses of the Japanese government, the tax reform could have a profound impact on the country’s crypto sector, potentially attracting more investors and fostering growth in the digital asset market.