The Japanese government has approved a tax reform that will benefit companies holding cryptocurrencies. An amendment to fiscal 2024 taxation laws will exempt firms from paying tax on unrealized gains on third-party digital tokens like Bitcoin.
Previously, companies had to pay tax annually based on the difference between the market value and book value of crypto assets. Under the new reform, assets held long-term will be exempted.
Firms will now only pay tax when digital currencies are sold, aligning the corporate tax system with rules for individual investors.
The change comes after lobbying from the Japan Crypto Asset Business Association, which argued the tax was stifling startup growth. The reform is intended to inject liquidity into the market and position Japan as a centre of crypto activity, much like other Asian regions.
However, analysts see it as a positive step that could attract international blockchain projects to Japan. The amendment will be presented in the Diet in January and requires approval from both legislative houses.
If passed, the tax break on unrealized crypto gains will provide key benefits for companies investing in the space.
