The Liberal Democratic Party (LDP) of Japan is urging the government to implement immediate tax reforms for cryptocurrencies. The LDP’s web3 project team recently released a white paper on the topic, emphasizing the need for separate taxation on profits and losses from crypto asset transactions. The team believes that this issue should be addressed promptly. Currently, Japanese law requires crypto traders to include their trading profits and losses in their annual income declarations. However, the proposed reforms would introduce separate taxation through self-assessment.
Japan’s tax regulations regarding cryptocurrencies have long been a topic of debate, with campaigners advocating for changes to the current system. Prime Minister Fumio Kishida has shown support for the web3 sector and indicated a willingness to reform tax laws. This has already led to tax reforms for corporations, freeing them from paying taxes on unrealized gains. If the Digital Society Promotion unit approves the tax reform proposal for individual traders, it will move forward to the Political Affairs Research Council and eventually become official LDP policy. Japanese crypto traders are optimistic that tax reform is imminent, given the ruling party’s support and majority in parliament.