- They no longer have to pay a 35% fee on unrealized profits
- The changes are designed to boost business activity in the sector and remove the tax burden on token-issuing firms
The Japanese National Tax Administration revised the corporate unrealized profit levy bill last week, June 20. According to the new version of the bill, token-issuing companies are exempt from paying it.
But a firm can only take advantage of the benefits if two conditions are met:
- tokens must be issued directly by the company. The counterparty keeps them all the time from the moment of issue;
- tokens must be subject to certain restrictions on transfer from the moment of their issue (here, it seems, we are talking about a partial ban on widespread distribution, for example by public distribution).</nbsp;
We note that the profile committee approved these amendments back in 2022 in order to stimulate business activity among cryptocurrency companies. But they have adopted them only now.
Up until then, all issuing companies had to pay a 35% tax on unrealized profits from their tokens if they were listed on the open market.. The levy was repaid at the end of the reporting period.
In practice, this meant that firms paid tax on “paper” profits. That is, it is there on paper, because of the increase in the price of the token, but the company does not actually receive it.
This change in legislation is a major step towards easing the existing regulatory framework in the field of virtual assets. Japan has a very conservative approach in this matter.
With effect from June 1, the country has a new licensing regime for service providers in the field of virtual assets. The rules have become significantly stricter and take into account the most relevant FATF recommendations in terms of anti-money laundering.