Takeshi Fujimaki, a Japanese lawmaker has proposed a number of changes to the country’s existing tax regime in a bid to ease the burden for cryptocurrency users and thus encourage the adoption of digital currencies in the country. The lawmaker, who is one of the representatives of Nippon Ishin, one of the country’s largest political parties, has suggested four significant changes in the national taxation scheme that governs the current crypto space.
Fujimaki asked the authorities not to undermined the future of the crypto space and the innovative technologies behind them. The measures he is proposing will help to lighten the current tax burden on the users and this will promote mass adoption of digital currencies in the country. This will also bolster further development of blockchain technology as well as other crypto-related applications.
The changes that were proposed by Fujimaki include:
The lawmaker has proposed the establishment of a distinct 20 percent tax rate on crypto gains – as it stands, cryptocurrencies are recognized as legal methods of payment in Japan but any profit made from them is still defined as “miscellaneous income” and must, therefore, be reported to the country’s tax authorities. Gains from crypto are currently subject to a tax rate of up to 50 percent depending on their volumes. This is quite high especially because it does not factor in the reality that trading crypto assets is a risky business and the profits are usually not stable. Lowering the tax rate would put crypto trading in the same league as mutual funds, stocks, and Forex which will definitely encourage more people to participate in it.
Allowing Traders to Carry Forward Losses
Drawing comparisons between other investment segments such as stocks and property where the investors are allowed to carry forward losses they may suffer, the lawmaker has suggested that crypto traders should also be allowed to resort to this strategy. The general idea here is to allow the crypto traders to make adjustments for previous losses by deducting them from the total revenue and then paying tax on the difference.
Tax Exemption for Crypto-to-crypto Transactions
According to the lawmaker, such immunity from tax on gains will promote the volume of transactions which will, in turn, reinvigorate the market of digital assets.
Tax Exemption for Minor Crypto Transfers
Finally, Fujimaki suggests that small payments made in crypto should be exempted from taxes. This, in essence, will encourage the use of cryptocurrencies as a form of payment in everyday life. Such a stance would then promote the mass adoption of cryptocurrencies in the country.
As much as these suggestions may be viable and very reasonable, having them implemented may be an uphill task since the authorities are still hellbent on sticking to their current stringent crypto regulations.